September 2005

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


What's a Certified Appraiser? - January

Best Appraiser Credentials - February

Are the diamonds you’re insuring real? - March

Handwritten Appraisals - April


Moral Hazard, Documents and the Bottom Line - January

Ruby and Jade - February

How to mail a diamond - March

Jewelry Insurance Appraisal Standards: JISO - April

Describing a gem's color - May

Why not just put jewelry on the Homeowner policy? - June

GIA Diamond Reports - July

Not just a pretty face - August

Moral hazards on the rise - September

Hurricanes, fires, floods—and jewelry insurance - October

Inherent vice / wear-and-tear losses are rising - November

FRAUD UPDATE – lack of disclosure, false inscriptions & doctored docs - December


Inflated appraisals—alive & well! Shady lab reports—alive & well! MORAL HAZARD—ALIVE & WELL! - January

Clarity Enhancements v. Inherent Vice - February

How green is my emerald? - March

Cruise Jewelry - What's the problem? - April

Crown of Light ® - how special is it? - May

Diamonds at Auction — Big gems, big prices, and the trickle-down effect - June

Are you sure her wedding jewelry is covered? - July

What Affects Jewelry Valuation? - August

What to look for – on the jewelry appraisal, on the cert, and on other documents - September

Growing Bigger & Bigger Diamonds - October

Scam season is always NOW - November

Ocean Diamonds - December


Pair & Set Jewelry Claims and the Accidental Tourist - January

Is that brand-name diamond a cut above the others? - February

Vacation Jewelry – Insurer beware! - March

Apple's Smartwatch – The risk of a wrist computer - April

Why you should read that appraisal - May

Smoking Gun! - June

Color-Grading Diamond: the Master Stones - July

Padparadscha—a special term for a special stone - August

Jewelry Appraisal Fees - September

Insuring a Rolex - steps to take, things to consider - October

Diamond camouflage and how to see through it - November

GIA Hacked! - December


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

Why NOT to insure a Rolex: Reasons 5-7 - August

Why NOT to insure a Rolex: Reasons 8-10 - September

Why NOT to insure a Rolex: Reasons 11-12 - October

The Doublet Masquerade - November

Is the gem suitable for the jewelry? Is this a good insurance risk? - December


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


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


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


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


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


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


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


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


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

Grading the Color of Colored Diamonds

New GIA Cut Grade for Diamonds - December


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


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


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


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


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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Valued Contract for Jewelry? —
Proceed with Caution!

Most valued contracts on jewelry are magnets for moral hazard. Why? Because jewelry’s scheduled value is often well above its actual cash value, and may even be well above its purchase price.

A few examples:

Example 1

The web site for Sam’s Club, a division of Wal-Mart, advertised a ring for $260,000. To prove the price was a bargain, the site also showed an appraisal valuing the ring at $450,000, almost twice the selling price.

Wal-Mart is the nation’s largest jewelry retailer, selling more than $2.5 billion per year. And they do sell high-end jewelry.

Example 2

Nor are such excesses limited to the Internet. Here’s a retailer’s display case showing appraisals right next to the jewelry. In all instances, the appraised value is about twice the selling price.

Click the picture to see one of the appraisals close up.

Just a few weeks ago NBC’s Dateline alerted the public to the widespread use of inflated appraisals to lure customers. Their investigators went to several stores and bought diamond rings selling at prices well below their appraisal valuations. To see a video clip of their report “Diamonds: Is There Such a Thing as a ‘Deal’?” follow this link:

Such inflated “appraisals” are actually sales tools. The retailer supplies them to make the buyer feel good about the purchase. Not that the buyer is being cheated. JCRS has found that, in many cases, the selling price reflects competitive retail value. It’s the appraisal that is grossly inflated. But too often such appraisals make their way into the insurer’s files.

If the insurer wrote a valued contract based on any of those appraisals:

You might think that people who have expensive jewelry also have a lot of money and therefore wouldn’t be tempted to file a fraudulent claim. However, a survey by Accenture found that 25% of consumers — regardless of their economic station — feel it is OK to file inflated or non-existent claims. Companies that write valued contracts have built such fraud into their rates.

Example 3

A 25-year-old men’s Rolex has a suggested list price of $20,000. Yet that identical 25-year-old watch can be replaced for about $6,000-$8,000. Why would this watch be written under a valued contract? A settlement should put the individual in the same position as before the loss occurred, not make him richer.

Actual Cash Value (ACV)

In the vast majority of cases, jewelry is best written on a standard ACV form. Actual Cash Value is determined at time of loss. Settlement is based on the cost to repair or replace the jewelry article with one of like kind.

Referring to Example 3 above, this means the insurer could replace the Rolex with one of the same vintage for $6,000-$8,000, rather than paying out $20,000. (Obviously, the difference between a new watch and a 25-year-old watch is depreciation.)

Actual cash value also eliminates the hazard of inflated appraisals. An insurance policy is not a vehicle for profit.

Policyholders sometimes argue that, since they are paying premiums based on their jewelry’s appraisal, they are entitled to a settlement equal to that amount. They must understand that the ACV policy requires the insurer to determine value at time of loss. (This could be higher or lower than the appraised value, but the insurer does not pay more than the limit of liability.)

Here’s another way to think about it. If we started offering replacement cost and valued contracts on autos, people would be conveniently finding telephone poles to back into, or they would set their cars up to be stolen. With cars, insurers have a lot of statistics, so we know a valued contract doesn’t make sense.

With jewelry, we have no real loss statistics. Most insurers maintain statistics only on scheduled personal property, which includes jewelry right along with computers, cameras, fine arts, etc. All those other classes are far less hazardous to loss than jewelry. They are, in effect, subsidizing jewelry.

Agents might also consider how their profit-sharing/contingency agreements are affected by overly generous settlements. How many premium dollars are needed to offset one excessive payout?

As noted in our July issue, almost all jewelry can be duplicated. ACV policy terms allow the insurer to have a duplicate made, thus returning the insured to the same position as before the loss. Replacing lost or damaged jewelry (or offering the cash equivalent of the cost to repair or replace) is normally much less expensive than paying the total amount under a valued contract.

The RARE Occasion

A valued contract IS called for when a piece of jewelry is truly irreplaceable, in which case there must be agreement. As discussed in our July issue, unique and irreplaceable jewelry is extremely rare. In most cases, actual cash value (ACV) is the reasonable, fair and cost-effective solution.

If a valued contract is to be used, at least it should be based not on inflated values but on a reputable insurance-to-value calculation.


Score the appraisal, using the Jewelry Appraisal and Claim Evaluation form (ACORD 18).

If the appraisal lacks crucial information, encourage the policyholder to submit the insurance industry’s standard Jewelry Appraisal (ACORD 78/79), written by a Certified Insurance Appraiser™.

Perform ITV (insurance-to-value) calculations, for which software is available.

Ask for the sales receipt, as well as an appraisal. If it is a recent purchase, we suggest, in most cases, that you not insure the jewelry for more than 125% of its purchase price.


In settling a valued contract, your only option for reducing losses is to encourage the client to take replacement in lieu of a cost settlement.

If the jewelry was purchased within the past year and the price is significantly less than the appraisal, be suspicious of fraud and consider involving your SIU (special investigative unit).


Typical language on standard ACV form for covering jewelry
(“other property”):

1. The value of the property insured is not agreed upon but will be ascertained at the time of loss or damage. We will not pay more than the least of the following amounts:
  a. the Actual Cash Value of the property at the time of loss or damage;
  b. the amount for which the property could reasonably be expected to be repaired to its condition immediately prior to loss;
  c. the amount for which the article could reasonably be expected to be replaced with one substantially similar to the article lost or damaged; or
  d. the amount of insurance.

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