Jewelry Insurance Issues

October 2003

JEWELRY INSURANCE ISSUES (formerly IM News), provides monthly insight and information for jewelry insurance agents, underwriters and claims adjusters.

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Jewelry Insurance Issues

Table of Contents

Click on article titles in red

2014

Who Grades? - January

Sales, discounts, price reductions, bargains, specials, mark-downs . . . . and valuation - February

Credential Conundrum - March

Frankenwatches - April

Fakes, fakes, and more fakes - May

Marketing Confusion — What is this gem anyway? - June

12 Reasons Not to Insure a Rolex! - July

2013

Wedding Rings on HO? NO! - January

Silver: the new gold - February

Point Protection - March

Tiffany v. Costco - April

What counts in valuing a diamond? - May

Appraising Jewelry - What’s a credential worth? - June

A Cutting Question concerning vintage diamonds - July

Synthesized Diamonds - Scam update - August

Pretty in Pink - Kunzite on parade... - September

Preventing jewelry losses - October

Scratch a diamond and you’ll find . . .??? - November

Synthetics in the Mix - December

2012

Advanced Gem Lab - A deeper look at colored gems - January

Whose Diamond? - February

Appraisal Inflation - It Keeps On Keeping On - March

Big Emerald - April

Changing colors and making gems: Are we seeing "beautiful lies"? - May

Diamonds - Out of Africa. . . or out of a lab? - June

Appraiser's Dream Contest - July

GIA & the Magic of Certificates - August

Pricey when it’s hot: What happens when it’s not? - September

Fooling With Gold - October

Tanzanite – December's stone - November

Branding Diamonds - What do those names mean? - December

2011

Unappraisable Jewelry - January

Replicas - Are they the real thing? - February

Composite Rubies- From bad to worse - March

Jewelry Hallmark - A Well-Kept Secret - April

Non-Disclosure: Following a Trail of Deception - May

Preserving the Diamond Dream - June

Spinel in the Spotlight - July

Jewelry 24/7 - Electronic Shopping - August

Diamond Bubble? - September

Disclosure: HPHT - October

"Hearts & Arrows" Diamonds - November

How a Gem Lab Looks at Diamonds - December

2010

Emeralds - And What They Include - January

Pink Diamonds: From Astronomical to Affordable - February

Palladium-the Other Precious White Metal - March

Bridal Jewelry - April

The Corundum Spectrum - May

How Photos Cut Fraud - and help the insured - June

The Price of Fad - July

Old Cut, New Cut-It's All about Diamonds - August

EightStar Diamonds-Beyond Ideal - September

The Hazard of Fakes - October

Jewelry with a Story - November

Counterfeit Watches - December

2009

Blue Diamond-cool, rare and expensive-sometimes - January

Turning Jewelry into Cash—
Strategy in a Bad Economy
- February

Enhancing the Stone - March

Being Certain about the Cert - April

Every Picture Tells a Story - May

Color-Grading Diamonds - June

The Newest Diamond Substitute - July

What Happens to Stolen Jewelry - August

Jewelry As an Investment - September

Black Diamond: Paradox of a Gem - October

Protect Your Homeowners Market—Keep Jewelry OFF HO Policies! - November

What’s So Great about JISO Appraisal Forms & Standards? - December

2008

Garnet - and Its Many Incarnations - January

Organic Gems - February

Do Your Jewelry Insurance Settlements Make You Look Bad? - March

Don't Be Duped by Fake JISO Appraisal - April

Diamonds in the Rough - May

The Cultured Club - June

Sapphire-Gem Superstar - July

It's a Certified Diamond! 
- But who's saying so?
- August

FTC Decides: Culture Is In! - September

Paraiba Tourmaline – What's in a Name? - October

How Fancy is Brown? - November

CZ – The Great Pretender - December

2007

Moissanite's New Spin - January

Online Jewelry - Buying and Insuring - February

Blood Diamonds - March

Damaged Jewelry, Don't Assume!- April

Chocolate Pearls - May

Appraisal Puff-Up vs Useful Appraisal - June

It's Art, but is it Jewelry?
- July

Diamonds Wear Coats of Many Colors - August

DANGER! eBay Jewelry "Bargains" - September

TV Shopping for Jewelry - October

Enhanced Emerald: clever coverup - November

How do you like your rubies -
leaded or unleaded?
- December

2006

The New Platinum: A Story of Alloys - January

Ruby Ruse - February

How Big are Diamonds Anyway? - March

GIA Diamond Scandal
Has Silver Lining for Insurers
- April

Watch Out for Big-Box Retailers Insurance Appraisals - May

Mixing It Up: Natural and Synthetic Diamonds Together - June

Tanzanite - Warning: Fragile - July

Red Diamonds - August

Inflated Valuations & Questionable Certificates - September

Emeralds - October

Where Do Real Diamonds Come From? - November

Counterfeit Watches - The Mushroom War - December

2005

The Lure of Colored Diamonds - January

Synthetic Colored Diamonds - February

Watches: What to Watch for - March

When is a Pear not a Pair? - April

The Truth About Topaz - May

White Gold: How White is White? - June

One of a Kind - or Not - July

Jewelry in Disguise - August

Valued Contract for Jewelry? Proceed with Caution! - September

Antiques, Replicas and All Their Cousins
October

Grading the Color of Colored Diamonds
November

New GIA Cut Grade for Diamonds - December

2004

Synthetic Diamonds - and Insuring Tips - January

Bogus Appraisals and Fraud - February

A Picture is Worth Thousands of Dollars - March

Don't be Duped by Fracture Filling - April

Gem Scams Point to Need for Change - May

What is a Good Appraisal - June

4Cs of Color Gemstones - July

Gem Laser Drilling: The Next Generation - August

Why Update an Appraisal? - September

When to Recommend an Appraisal Update or a Second Appraisal - October

Secrets of Sapphire - November

Will the Real Ruby Please Stand Up - December

2003

Mysterious Orient:
A Tale of Loss
- January

Bogus Diamond Certificates and Appraisals - February

Can Valuations be Trusted? - March

Spotting a Bogus Appraisal or Certificate - April

Counterfeit Diamond Certificates - May

Case of the Mysterious "Rare" Sapphires - June

Politically Correct Diamonds - July

Name Brand Diamonds - September

Princess Cut: Black Sheep of Diamonds - October

Reincarnate as a Diamond - November

Synthetic Diamonds - December

2002

Irradiated Mail/Irradiated Gems - January

Fake Diamonds (Moissonite) - February

GIA Diamond Report - March

AGS and Other Diamond Certificates - April

Colored Stone Certificates - May

Damaged Jewelry: Don't Pay for Nature's Mistakes - June

The Case of the "Self-Healing" Emerald - July

Mysterious Disappearance: Case of the Missing Opals - August

The Discount Mirage - September

What Can You Learn from Salvage? - October

Gaining from Partial Loss - November

Year in Review - December

2001

Colored Diamonds - January

Good as Gold - February

Disclose Gem Treatments - March

FTC Jewelry Guidelines - April

Myths Part I: Each Piece is Unique - May

Myths Part II: Myths, Lies, & Half-Truths - June

New Trend: Old Cut Stones - October

The Appraisal Process - November

Year in Review - December

2000

Deceptive Pricing - January

Gems - Natural or Manmade - February

Jeweler/Appraisal Credentials - March

Fracture Filling - April

Salvage Jewelery - May

Gem Treatments - June

Don't Ask/Don't Tell - A Buying Nightmare - July

Laser Drilling of Diamonds - August

Jeweler Ethics or the Lack Thereof - September

Gem Scam - October

The Truth about Clarity Grading - November

Year in Review - December

 

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Princess Cut:
The Black Sheep of Diamonds


They're likely to get into trouble, these princess cut diamonds. Likely to get chipped, damaged. Likely to have to be replaced. Why is that?

It's a matter of shape

Round Brilliant Cut Diamond
 

Round Brilliant Cut

Princess Cut Diamond

The "princess cut" diamond, on the other hand, is square when viewed from the top. Four corners are exposed for damage. This shape is so vulnerable that some jewelry experts characterize it as an accident waiting to happen.
 

Princess Cut       

 

Diamonds are reputed to be quite hard. Do they really damage so easily?

Diamond is, indeed, the hardest gem. In gemological terms, hardness means resistance to scratching. A diamond can scratch other gems, but nothing can scratch a diamond except another diamond. Cutting and faceting of diamonds can be done only with other diamonds because only diamond can cut diamond. Their hardness also allows diamonds to take a high polish, which enhances their scintillation.

Toughness, however, refers to the ability of the gem to resist breakage, as from a blow or fall. Diamond's toughness rating is only fair to good. Those sharp corners do make the princess cut diamond more vulnerable.

It comes down to carat weight

The princess shape was invented to get the biggest gem out of a piece of rough stone. Customers may not know much else about how to judge a diamond, but they will pay more for size (carat weight). As discussed in our last newsletter, cutters often sacrifice beauty for a higher carat weight. Similarly, the princess cut sacrifices durability for carat weight.

What does it mean to the insurer?

Insurance companies have been routinely paying damage claims for chipped corners on princess cut diamonds. Really, they should NOT be paying on such claims. These vulnerable corners constitute inherent vice, and their chipping should be excluded by the policy. However, this would be difficult to enforce since past practice has been to pay on such damage claims. Policyholders might sue for bad faith claims practices. A better approach would be to exclude all damage on princess cut diamonds.

We hope that the jewelry industry will follow the lead of Sirius, a Canadian company that has modified the princess cut by clipping the tips off the corners. This does lighten carat weight somewhat but it also reduces the likelihood of damage. Sirius sells the modified princess cut under the name Arctic Empress™. These stones are truly cut for beauty.
  

FOR AGENTS & UNDERWRITING

First of all, exclude breakage on all princess cut diamonds.

Two other common shapes, though less popular than princess cuts, also have a high vulnerability to damage because of sharp points. Though you may be unfamiliar with the names of diamond shapes, the photo included with the appraisal will show points vulnerable to damage.

Pear Cut

Marquise Cut

Regarding inherent vice, shape is not the only consideration. In a diamond of any shape, poor cut proportions can produce places vulnerable to damage. A common problem is a girdle that is too thin.

Points along the girdle may be covered by prongs in the setting. Note, however, that the points are still likely to break under stress. A lot of princess cut diamonds incur point chipping when the stone is set, removed for resetting, etc., but prongs then hide the earlier damage.

A good appraisal, prepared on ACORD 78/79/805 forms, will disclose all cutting information. If the girdle is described as "very thin" or "extremely thin," exclude damages on that stone.

FOR CLAIMS

Caution: Some shapes are so open to damage that breakage on such diamonds should be excluded because of inherent vice. See discussion above.

In a gem of any shape, poor cut proportions can produce places vulnerable to damage, such as a too-thin girdle. A detailed appraisal will give all cut proportions. From such an appraisal, an experienced jeweler can determine whether cut proportions were so poor as to constitute inherent vice.

NEXT ISSUE

Reincarnate as a Diamond?

 

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