Most people are surprised to learn that their homeowner's insurance policy typically does not provide coverage for their collections. Artwork, jewelry, and many other specific collections are usually insured only up to a value of $15,000. Protecting precious family heirlooms, collections, or single items of value often requires a written appraisal submitted by a "qualified appraiser." So, what exactly does this term mean? IRS Publication 561 defines a “qualified appraiser” as a professional individual who meets the following guidelines:

• Accreditation from a recognized professional appraiser organization. The top three national and international associations offering accreditation are the ASA (American Society of Appraisers), AAA (Appraisers Association of America), and ISA (International Society of Appraisers). Company President Lynn Magnusson is a member of all three societies.

• USPAP-compliant: Follows the Uniform Standards of Professional Appraisal Practice, defined by the Appraisal Foundation under the authority of Congress.

• Professional: The appraiser regularly prepares appraisals for a fee.

• Competence: The appraiser has expertise in examining the type of item in the appraisal.

• Preferred Providers: Insurance companies have preferred providers for appraisals (e.g., The Magnusson Group is a Preferred Provider for Chubb, AIG, and others).

• High-quality references from peers and previous clients. Because personal property appraisers are not licensed by a state agency (in contrast to real estate appraisers), you should get a recommendation from a trustworthy colleague or professional.

What Does It Mean To Be Accredited?

You can trust an appraiser who is accredited by one of the recognized professional organizations. The top three national and international associations offering accreditation are the ASA, AAA, and ISA. To achieve accreditation from these organizations, an appraiser must pass a series of tests in core subject areas:

• Appraisal methodology

• Connoisseurship in a specialization area

• Report writing

• Professional standards, i.e., USPAP

• IRS guidelines

Some appraisers (myself included) obtain additional credentials in particular sub-specialties. For example, Master Gemologist David Wolf, ASA, regularly takes precious stone and jewelry exams to remain current. All Certified or Accredited Members of these professional organizations are required to take a prescribed minimum number of hours of continuing education to retain membership in good standing. For the ASA, 100 hours are required every five years!

What is USPAP Compliance?

“USPAP” stands for Uniform Standards of Professional Appraisal Practice, a set of standards for valuing anything. These mandatory standards were established by the Appraisal Foundation and Congress in response to the 1980s Savings and Loan Crisis. USPAP governs appraisals of businesses, real estate, machinery & equipment, in addition to personal property. USPAP is revised every two years, so an appraiser must re-qualify every two years by completing a USPAP course and passing an exam on the current standards.

In general terms, USPAP covers the following aspects of appraisal practice:

• Ethics

• Scope of Work

• Retaining Records

• Purpose & Use

• Defining and Analyzing Market Data 

For More Information, see our other Magnusson blogs: Appraising Personal Property For Tax Purposes or What You Need To Know About Gifting Or Donating Fine Objects

Co-Authors: Lynn Magnusson, ASA, AAA and Becky Lipnick, Communications Coordinator