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Insurance Documentation by the Seller as an Express Warranty
Representations of Replacement Cost
Legal Considerations and Supplemental Requirements
Recommended Statements and Disclosures
Statements and Disclosures Checklist
Descriptive Guidelines Checklist
Appendix A: Sample Disclosure Statements
Reporting the Actual Price Paid
Disclosing Reliance on the Representations of Others
Disclosing Subjectivity in Grading
Disclosing the Accuracy of Photographs
Appendix B: Sources of Appraisal Training and Information
"Boilerplate" paragraphs prepared in an effort to abdicate all responsibility (likethose often found as small print on preprinted "Appraisal" certificates) should beavoided. Each estimate of replacement cost should contain a signed certificationsimilar in content to the following:
I certify that, to the best of my knowledge and belief:
The statements in this document are true and correct including representations ofquality and quantity.
I have made a personal inspection of the property unless otherwise stated. (If morethan one person signs the document, it should be clearly stated which of them madepersonal inspection of the property.)
Although neither my compensation nor the consummation of any sale is contingent uponthe reporting of any predetermined replacement cost, this document may have beenprovided as evidence of the quality of a purchase made from [Name] Jewelers.
Unless otherwise stated, the subject property was sold by [Name] Jewelers and thereplacement cost stated is the actual price paid. In any case, the replacement costestimate is the most common actual sales price of the same, identical or fully comparable property if sold by [Name] Jewelers at this time.
I am competent to identify and determine the relative quality of the subject property,which is within the range of properties normally bought and sold by [Name] Jewelers.All significant characteristics affecting the replacement cost have been reported.
Every effort has been made to grade any gemstones described in this document as accuratelyas possible within normal, reasonable and acceptable gemological ranges. Opinionsof quality and grade may vary upon reexamination or examination by another qualified grader. Every effort has been made to determine the metal identity and finenessof any mountings described in this document as accurately as possible without theuse of damaging tests. This document has been prepared in conformity with the RecommendedMinimum Guidelines for Insurance Replacement Cost Documentation as published by theJeweler's Vigilance Committee, Inc.
[SIGNATURE]
[SELLER/PREPARER'S NAME AND TITLE]
Note: It is the content of the certification that is important, not the exact wordingor format. This certification can be adapted to the preparer's preferred documentstyle provided the meaning and intent are retained.
Appendix A: Sample Disclosure Statements
Disclosure statements should always be made in a positive manner. When done properly,they demonstrate your care and professionalism and assure your customer that, toyou, their welfare comes first. Some sample disclosure statements follow:
Reporting the Actual Price Paid
It is the opinion of the JVC ATF that the actual price paid should always be statedin insurance documentation that has been prepared by a seller for use by the purchaserof the item.
"This ring was sold during our semiannual inventory reduction sale for $800. Our usualactual selling price is $1,000. Replacement cost through XYZ jewelers is $1,000."
"Mr. Smith is our frequent and valued customer and received a special price considerationfrom XYZ jewelers in purchasing this ring for only $800. Unfortunately we are notalways able to offer such considerations and our most common actual selling pricefor this ring is $1,000. Replacement cost through XYZ jewelers is $1,000. "
"This ring was sold by XYZ jewelers for $800. Due to the current cost of restockingthe ring through our usual supplier, it could not currently be replaced for thatamount. Our actual selling price would, of necessity, be adjusted to reflect ourhigher wholesale cost. Replacement cost through XYZ jewelers is now $1,000. "
"Although Mr. Smith just purchased this ring for $1,000 from XYZ Jewelers, it wasa special order design. A wax model had to be specially hand carved and fitted toMr. Smith's gemstones. Since XYZ jewelers retains the pattern for this one-of-a-kinditem in our files, much of the handwork necessary to provide a replacement would not be needed.For this reason, XYZ Jewelers could provide an identical replacement at this timefor only $800. Notice to the insurance adjuster: This design (#TIO001) is copyrighted by XYZ Jewelers and any attempt to replace it through reproduction elsewhere mayresult in legal action."
There are a few times when the actual price paid need not be stated. There is no needto disclose actual selling price if the item was sold, for example, to an insurancecompany for use in replacing a lost item. The insurance company was not dealing inthe retail market and the price they paid has no relevance to the insurance contract.Omission of the price paid by the insurance company therefore would not be consideredas withholding a material fact. It should be disclosed, however, that the insurancecompany was the actual purchaser and that the replacement cost stated reflects the insured'scost of replacement through the seller's store. For example:
"This ring was purchased by acme Insurance company as a replacement for one previouslyowned by Mr. Smith. The replacement cost stated represents Mr. Smith's current costof replacement through XYZ Jewelers. Acme Insurance paid a different amount basedon standing agreements between Acme Insurance and XYZ Jewelers. Replacement cost throughXYZ jewelers is $1,000. "
It may also be deemed acceptable to merely report the existence of a discrepancy betweenthe actual selling price and reported replacement cost in cases where the item waspurchased as a gift and the purchaser does not wish the actual sales price to bedisclosed to the recipient. In this case, confidentiality takes precedence and the existenceof a discrepancy can be disclosed without stating the actual amount of the difference.Use caution in doing this, however, as this situation should not be used as an excuse to puff or inflate the value. The replacement cost stated should still bethe most common actual selling price for the item in the preparer's store.
"This ring was purchased from XYZ Jewelers by Mr. Jones as a gift for Mr. Smith. Dueto the current cost of restocking the ring through our usual supplier, it would notcurrently be replaced for the amount paid by Mr. Jones. Our actual selling pricewould, of necessity, be adjusted to reflect the changes in our wholesale cost. Replacementcost through XYZ jewelers is now $1,000. "
Disclosing Reliance on the Representations of Others
Reliance on representations of quality or quantity made by others, such as gemologicallaboratories, manufacturers, or suppliers must be disclosed. Here are some examples:
"The quality and total carat weight of the diamonds in this tennis bracelet is statedas represented by the manufacturer, Manufacturer's Name (Serial #). We believe theserepresentations are accurate, and it would be impractical to remove the diamondsfor weighing and keener grading. "
"This replacement cost estimate for this diamond was based on the qualitative informationpresented in Some Gemological Laboratory (SOL) Report #XXXXX dated . Therefore, welimited our inspection to verification that the diamond is the one described in that report. "
Disclosing Acceptable Ranges of Accuracy in Grading
To protect yourself from claims of misrepresentation, it is important to disclosethat gemstone grading is done subject to an acceptable range of accuracy. This doesnot relieve the preparer from using due care nor excuse instances of gross erroror deliberate misrepresentation.
"Every effort has been made to grade the gemstones described in this document as accuratelyas possible within normal and reasonable gemological ranges. Legitimate opinionsof quality and grade may vary upon reexamination or examination by another qualified gemologist. "
"Mounted diamonds can be graded only to the extent permitted by the mounting, andan accurate determination of grades and measurements may be prevented by certaintypes of mountings. Different types of settings have various impacts on grading accuracy.In addition, some grades are more easily distinguished than others when mounted. Unlessotherwise stated, the carat weight of mounted gemstones was determined or confirmedby measurement and volumetric formula and should be accurate within accepted limitations of that method. Unmounted gemstones are physically weighed, allowing much greateraccuracy. "
< Disclosing the Accuracy of Photographs
To avoid misinterpretation and possible allegations of misrepresentation, the shortcomingsof photographic representations should be disclosed.
"The photographs included serve to document design and general appearance and arenot necessarily accurate reproductions of scale, color, quality or condition. "
Appendix B: Sources of Appraisal Training and Info
The JVC ATF recommends that every preparer of insurance documentation obtain more information about the preparation of appraisals and the developing appraisal profession. The organizations and companies listed below publish information and/or offer classes in the appraisal of gemstones and jewelry. This list is not all inclusive, and should not be considered as endorsement by the JVC. Those seeking additional training and information should carefully investigate the various sources available to them todetermine which will best serve their particular needs.
American Gem Society
1050 East Flamingo, Suite 130
Las Vegas, NV 89119
(702) 225-5500
American Society of Appraisers
P.O. Box 17265
Washington, D.C. 20041
(703) 478-2228
(800) ASA-VALU
Appraisal Foundation
1029 Vermont Avenue, N.W., Suite 900
Washington, D.C. 20005
(202) 347-7722
FAX: (202) 347-7727
Appraisal Information Services
2216 Ryder Street
Brooklyn, NY 11234-5116
(718) 692-1975
FAX: (718) 692-3720
Appraisers Association of America
60 East 42nd Street, Suite 2505
New York, NY 10165
(212) 867-9775
FAX: (212) 599- 1128
Gemological Institute of America
1660 Stewart Street
Santa Monica, CA 90407
(800) 421 -7250
FAX: (310) 453-7674
Gemological Appraisal Association
658 Washington Road
Pittsburgh, PA 15228
(412) 344-5500
FAX: (412) 344-4910
International Society of Appraisers
Riverview Plaza Office Park, Ste. 320
16040 Christensen Road
Seattle, Washington 98188
(206) 241-0395
FAX: (206) 241-0436
The Master Valuer Program
P.O. Box 1844
Perland, Texas 77588
(713) 485-1606
FAX: (713) 485-1606
National Association of Jewelry Appraisers
P.O. Box 6558
Annapolis, MD 21401-0558
(301) 261-8270