One of the most common questions I receive from clients is, “What’s the difference between an insurance appraisal and a resale appraisal?” The short answer is that they serve very different purposes and rely on different types of market data. Understanding which one you need depends on why you’re seeking an appraisal in the first place.
Insurance Appraisals: Establishing Retail Replacement Value
An insurance appraisal is typically prepared to assist with obtaining or maintaining insurance coverage for artwork or other personal property. The value developed, known as Retail Replacement Value, reflects the amount it might take to replace the item with another of like kind and quality within a reasonable amount of time in the retail market.
That market may include galleries, dealers, or other retail venues where comparable works are available. This value considers not only the artwork itself but also associated costs that might come with replacing it, such as framing or sales commissions.
Because the art market changes over time, insurance appraisals are often updated every few years to ensure coverage remains accurate and sufficient.
Resale Knowledge Appraisals: Understanding Market Behavior
A resale knowledge appraisal, sometimes referred to as a market advisory or fair market–oriented analysis, focuses on what an item might reasonably sell for under current market conditions. The data used comes from the secondary market, including auction records, private sales, and other sources that reflect what buyers have recently paid for comparable works.
This type of report is often helpful for collectors who are considering selling a piece, managing an estate, or simply trying to understand how their artwork fits into the current market. The emphasis is on providing informed context about potential resale expectations, not setting or guaranteeing a specific sale price.
Why the Two Differ
The distinction lies in the intended use and the definition of value.
- Insurance appraisals focus on replacement, usually in the retail market.
- Resale knowledge appraisals focus on actual market behavior, typically in the secondary market.
It is not unusual for the insurance value to be higher than the resale estimate since each is answering a different question.
Which Type Do You Need?
If your goal is to insure your artwork, an insurance appraisal is the appropriate approach. If you are thinking about selling, downsizing, or understanding current market trends, a resale knowledge appraisal will offer more relevant insight.
When we determine the intended use at the start, it ensures the report is developed in compliance with appraisal standards and meets your needs accurately and ethically.
In Summary
Both insurance and resale knowledge appraisals serve important but distinct roles. The right one depends on your purpose. As an appraiser, my goal is to help clients make informed decisions, whether that means protecting what they have or understanding what it might be worth in today’s market.