Best Practices for Appraising Valuable Collections

Training and education are hugely important to elite financial advisors

By Rand Silver

Key Takeaways:

  • Appraisals are often the basis for valuing fine art, antiques, jewelry, antique cars and other collectibles.
  • It’s important for clients to have their collections appraised every few years.
  • If a piece is lost, stolen or damaged, an outdated appraisal could limit the clients’ ability to be fully compensated by their insurance policies.
  • Just as hedging tools or stop-loss strategies protect a financial portfolio, comprehensive insurance and dedicated risk management, along with expert appraisals, can protect a client’s collection portfolio.

Trillions of dollars in art, antiques, jewelry and other collectibles are held privately. Some of this is owned by those who have spent a lifetime acquiring world-class collections. Much, however, is owned by those who do not consider themselves “collectors.” These valuables may have been inherited, received as gifts or purchased to decorate a home. In any scenario, the value of these assets will increase dramatically over time, regardless of seasonal or annual trends. Because your clients’ artwork and other valuables constitute a meaningful asset class, maintaining updated values of those assets is crucial to protecting their portfolios.

The appraisal is often the basis upon which insurance values are set, and the appraisal provides an important record of the owner’s holdings. If a piece is lost, stolen or damaged, an outdated appraisal could limit your client’s ability to be fully compensated through his or her insurance policy.

The following guidelines will help your clients evaluate and act on their appraisal needs, regardless of their collecting level.

1. Determine the need.
There are a number of reasons why your clients might need an appraisal. Current appraisals may be required when donating or gifting items, when involved in estate or divorce situations, when contemplating a sale for the IRS, or when using valuable items as collateral for a loan.

As such, there is a range of value types that correspond to each type of appraisal, such as fair market value (FMV), retail replacement value (RRV), or marketable cash value (MCV). Retail replacement value—generally the highest valuation figure for personal property—should be used as the basis for insuring valuable objects. To avoid confusion, it is important to note that no appraisal serves as an authentication.

2. Consult the right professional.
Seeking an expert appraiser with appropriate references is paramount. Your appraiser should be a professional who performs appraisals on a regular basis and who is a specialist in the type of items being evaluated. Don’t be shy about reviewing the appraiser’s resume to gauge his or her experience. Ideally, the appraiser will have been tested and certified by a recognized professional organization, such as the Appraisers Association of America or the International Society of Appraisers. At the very least, the expert’s work should conform to Uniform Standards of Professional Appraisal Practice, the quality control standard for real and personal property appraisals in the United States. Your fine art specialty insurance provider has strong relationships with a wide range of appraisers and can be a valuable resource for referrals.

3. Consider it all.
It’s not just the fine art on your clients’ walls that needs to be valued. Men’s watches and antique carpets are genres of valuables that are often overlooked when obtaining an appraisal. These genres are also highly susceptible to loss and damage, respectively. Also, make sure to consider your clients’ antique cars and investment-grade wine; both are collecting categories that have been rapidly increasing in interest and in value.

4. Stay current.
No hard and fast rule exists for when clients should obtain updated insurance appraisals. That’s because different segments of the art and valuables markets appreciate at varying rates. However, a good rule of thumb is to get an updated appraisal every three or four years. This may sound extreme, but depending on the specific genre in question, insurance claims experience has shown that even a three-year interval between appraisals can be inadequate in an active market. Specific genres of art can enjoy periods of unusually strong sales, and record-breaking sales for a particular artist can fuel a spike in prices. Similarly, the ever-changing prices of precious metals or stones dramatically impact jewelry values. As a result, your clients may discover the need to re-evaluate some parts of a collection more frequently than others.

5. Connect the dots.
Effective collection management means more than merely determining value. Just as hedging tools or stop-loss strategies protect a financial portfolio, tools exist to protect a collection’s portfolio, including comprehensive insurance and dedicated risk management, along with expert appraisals. Because volatile financial markets may be the norm for the foreseeable future, moves to protect tangible assets should be an integral part of managing wealth.


Remember, by encouraging your clients to take advantage of appropriate collection-management expertise, you are helping them protect their financial worth as well as their emotional and aesthetic investments.

About the Author

Rand Silver is the National Director of Art Collection Management for the Private Client Group division of AIG.