Types of Valuation in New Zealand
Specifically for the Gem and Jewellery Disciplines
Please remember that some laws relating to appraisal and valuation terminology can vary with geographic area and jurisdiction. The nomenclature used here is that which most commonly occurs or minor detail that varies greatly between jurisdictions has been omitted.
The definitions are not intended to be legally exhaustive. The information noted here is intended to offer guidance to consumers to assist them to better understand the purpose and function of each valuation type and to bring some clarity, when needed, to terminology used by a jewellery valuation professional.
We are indebted to Paul Nilsson FGA of GemLab Jewellery Valuers in Auckland for his assistance in compiling these New Zealand appraisal and Valuation categories and definitions.
To view jewellery appraisal types used in other countries, please go to the Worldwide Jewelry Appraisal Definitions page.
Valuation for Insurance
Insurance - Inception
In New Zealand there are two levels of cover for your jewellery : Replacement or Indemnity. Replacement Value means the cost to replace with a NEW item of equivalent type, utility and quality. Indemnity Value means the second-hand retail value of the item. Indemnity Value may be notated on a policy as present day value, market value, or current value. NZ Insurance companies prefer that appraisers report both Replacement and Indemnity values on most jewellery items and watches so that cover can be provided at the correct level according to the policy wording. Because the level of cover you nominate for each high value item usually forms the insurance company’s limit of liability, and the objective of a professional insurance valuation is to protect you, it is common for insurance valuations to include a small ‘cushion’ against future increases in jewellery prices.
Insurance - Post Loss
It is standard practice for Insurers to request a valuation from an independent valuer in addition to, or instead of, any quotes obtained from jewellers. As with insurance cover valuations, both Replacement and Indemnity Values are required, as defined above, for your lost or stolen items, so that the claim can be settled at the correct value level to satisfy the insurance contract you hold. However, in the case of claims assessments it is the values at the time of loss that are reported, with no ‘cushion’. For damaged items a more complex report is required that details the pre-damage Replacement and Indemnity values, an outline of the damage, the likely cause, the likely cost to repair, as well as the salvage value of the damaged item in case it is written off - this report provides you and the insurer with all the information necessary for an equitable settlement decision.
Valuation for Selling
Depending on the value of the item, your Valuer may recommend one of a range of documentation options to assist - these include an Identification only, a Quality Report, or a Market Valuation. Any of these may also be accompanied by a separate Cash Realization Value which is the valuers opinion of what you, as a private individual, is likely to achieve in selling the item given a reasonable time-frame and taking the best options available. For urgent selling a Cash Liquidation Value should be reported instead. It should be noted that the use of insurance valuations as a sales tool for jewellery may fall foul of consumer protection laws in New Zealand.
Estate Division Report
The report for estate division recommended by your Valuer will depend on the circumstances and your requirements. It might be as simple as dividing the items into roughly equivalent value groups with little or no documentation. It could be that insurance valuations will provide a basis for distribution of the jewellery separately from other assets and at the same time allow the recipients to arrange cover. Where other assets or cash are being offset against the jewellery it is more likely that a Cash Realization Valuation would be required.
Sale Between Parties
Valuation for Sale Between Parties
The is an appraisal provided to assist with a fair sale & purchase transaction between private individuals. It would normally be reported as the mid-point between the retail market value and the cash realization value, ie halfway between what it would cost to buy second-hand and what a private seller would likely get for it nett at auction or by selling to the trade.
Valuation for Divorce Settlement
Courts in New Zealand have dictated that matrimonial property should be valued at market value defined as likely auction hammer price before buyer’s premium is added or commission is deducted.