February 2007

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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Online Jewelry—
Buying It and Insuring It

The Internet is full of apparent bargains. But does an online buyer get enough information to make an informed purchase decision?  And how does this affect the insurer?

The approach of this issue is a bit different. Although we're talking about "consumers" buying jewelry, insurers are consumers after the fact. Insurers deal with the purchases, so they need to know the pitfalls and scams associated with buying online. Insurers might also wonder whether the Net is a reliable replacement source for adjusters.

A jewelry site can easily sell items for less than the corner jeweler. It doesn't have to support a luxurious showroom and may not even warehouse any product. A piece of jewelry might be ordered online, then made, then shipped to the customer directly from the manufacturer.

Though a brick-and-mortar store may occasionally special order high-priced items for customers, a Web site can special order each thing when it is purchased. If some of the pictured items never sell, there's no loss to the "e-tailer," no excess stock taking up space.

A customer who knows what he wants can go to various sites and compare quality and prices. Bargains are indeed possible. But can jewelry buyers assess exactly what they're getting through a Web site?

Take, for example, this piece offered recently on Costco's site. This is a one-of-a-kind platinum ring set with an 11.37 carat center diamond and two small heart-shaped diamonds. The price is $500,000 — half a million dollars! But whether a purchase is $5,000 or $500,000, the perils are the same.

Click to enlarge


Click to enlarge

Is this a good buy?

The potential buyer for this piece isn't the average Costco shopper with grocery cart. Shopping for any gem requires knowledge and expertise. For jewelry in this price range (or any gemstone purchase, for that matter), a buyer could certainly benefit from the advice of a trusted jewelry expert.

Even from the written description and picture on the site, a trained jeweler/gemologist would be able to point out some issues.

Is this a good price?

We took this question to two jeweler gemologists who regularly deal in high-end jewelry. One calculated Costco's cost at $408,000, saying that a 10-15% markup is reasonable. He would price the ring in his brick-and-mortar store at $450,000. The second jeweler would offer it for between $450,000 and $480,000.  Conclusion: Costco's price of $500,000 is no bargain — though the IGI valuation gives the illusion of a bargain.

In general, we recommend comparison shopping to get the best quality for the best price. However, a unique piece like this would be difficult to comparison shop. You most likely would not be able to find one like it on another site or in a store. But large diamonds are often sold at auction. Consumers and insurers have access to information on sales at Christie's, Southeby's, etc.

What about this "Summation of Appraisal"?

Buyer—and insurer!—must be wary of self-serving appraisals or other documents supplied by the seller.

This ring comes with a "Summation of Appraisal" from International Gemological Institutes, Inc. (IGI). The document describes the jewelry in some detail but gives only limited cut information. This is not surprising, since cut information is rarely reported to customers. Most jewelers, and even diamond certificates, do not disclose key cut proportions. Yet, as noted above, detailed cut geometry is critical for determining the quality, and hence the value, of a diamond.

For this information, it is necessary to have an appraisal from a trained jeweler who is dedicated to the principle of full disclosure, such as a Certified Insurance Appraiser™.  The appraiser must also be someone who regularly handles this quality of jewelry.

The "Summation of Appraisal" gives an estimated replacement value of $677,695. That's more than a third over the asking price. Such a bargain is not likely. Even Big Box sellers that may call themselves wholesale clubs are still retailers, looking to make a profit.

(It's worth noting that the asking price is not necessarily the selling price. In 2005 Sam's Club, Wal-Mart's online store, advertised a  necklace for $300,000, but eventually marked it down to $250,000. We can be sure they still made a profit. The IGI valuation on that item was $575,950.)

IGI is noted for its inflated valuations, as we've discussed before. Though buyers may feel they've come out way ahead, insurers should not use this document as a basis for underwriting or settlement.

We put "Summation of Appraisal" in quotes to remind you that this is IGI's phrase and should not be confused with a dependable appraisal and valuation. For insuring a piece like this one, a unique piece at this price, you should surely require an independent appraisal by a Graduate Gemologist who is also a CIA™, using standardized forms and procedures.

Protecting Yourself (Buyer & Insurer)

What a buyer misses by purchasing jewelry on the Web is the advice and expertise of a professional jeweler gemologist.

The next best thing is to get this advice immediately after the fact. Anyone who purchases jewelry sight unseen should have it appraised as soon as possible, by a reliable jeweler who is a Graduate Gemologist, to verify the jewelry's quality and value. Huge retailers like Costco allow a buyer to return merchandise that doesn't meet expectations. (An extra precaution is to pay for jewelry items only by credit card, so refunds will not be a problem.)

As in the brick-and-mortar world, on the Net there do exist honest retailers and good bargains. But don't take "bargains" at face value. Protect yourself and your clients by insisting that they get a detailed appraisal on JISO 78/79 by a Certified Insurance Appraiser™.


Retain a copy of the sales receipt. This is more dependable evidence of retail value than a possibly inflated appraisal supplied by the seller.

A diamond jewelry purchase often comes with a "Diamond Certificate." Rely only on certificates from Gemological Institute of America (GIA) or American Gemological Society (AGS).

Do not rely on certificates that

For any jewelry purchase made online, insist on a JISO 78/79 appraisal by a Certified Insurance Appraiser™.


Diamond certificates from reliable labs, such as GIA and AGS, describe the gem but do not carry valuation. Valuations found on diamond certificates from other labs are likely to be inflated. Do not rely on them.

GIA Diamond Reports are so highly regarded that they are sometimes forged. You can quickly check a report's authenticity either online or by phone (760-603-4500 ext.7590).

A valuation that is well above the selling price is probably inflated. Base the settlement on the description of the jewelry, not its valuation.

When adjusting large-item losses, look out for your own interests. You may need the counsel of a jewelry insurance expert, just as a consumer needs advice when making a purchase.


The girdle is where the setting holds the stone. If the girdle is too thin, the diamond will chip there. If the girdle is unevenly cut, the stone will be problematic to set.

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