September 2009

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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Jewelry As an Investment

Say the economy is in flux (as it is now, for example) and your client has decided to invest in jewelry, since jewelry should hold its value. Does this make any difference to you, as agent or insurer?

Maybe your client hears that gold is a good investment and buys gold jewelry so she can enjoy wearing her precious metal rather than just putting gold bars and coins in a safe while they increase in value. Or maybe your client wants to insure a necklace that's been a family heirloom for three generations and she feels it can only gain in value. Or he's bought a package of loose gems and is holding them for resale at some future time.

These consumers have bought, or are holding, jewelry as an investment.

Gems and jewelry may seem like good investments. They are small, quite valuable for their size, and relatively durable.

There's also a general belief that anything rare, expensive or well-crafted will increase in value. Even many mass-produced objects that were originally cheap and commonplace become collector's items—like comic books, ruby glass, or any number of things you can see on Antiques Roadshow. Certainly jewelry would be likely to appreciate in value.

What's wrong with this assumption?

1. Jewelry is a commodity.

Regardless of its purchase price, jewelry is subject to market forces, and the market can be fickle. Prices of gems and metals fluctuate due to political crises, weather events, technological breakthroughs, and cultural trends. A gem can become popular because a movie star wears it. The fashion color of the season may affect gem choices.

The appraisal's valuation is based on the current replacement cost. It does not say anything about value at some future time of loss (perhaps 10 or 20 years from now)—though a settlement is based on the value at time of loss. That's why we recommend updating the valuation of quality jewelry every couple of years.

2. Older is not necessarily better.

Just because jewelry has been in the family for years, that doesn't mean it's valuable. Jewelry styles may go out of favor. Regardless of age or sentimental value, a piece that's considered “old fashioned” may have no buyers in today's market, and therefore little value. Even the cut of a gem can be outdated, as new technologies and expertise allow for more attractive cutting of the stone.

Also, old jewelry may not be what you think it is—or what the consumer thinks it is. A future newsletter will discuss in more detail insurance issues concerning antique and estate jewelry.

3. “Investment gems” are a common scam.

Selling gems “for investment” is a fraud that keeps resurfacing. Usually the gems arrive in a sealed package, which the buyer is cautioned not to open in order to preserve the gems' value. This is a major red flag!

A jeweler/appraiser must examine a gem to determine its value. No buyer should merely accept the word of a seller without impartial verification of the gem's quality. The buyer—and the insurer—should get an appraisal from a Graduate Gemologist, preferably a Certified Insurance Appraiser™.

4. Uncut stones and loose stones are a bad risk.

Occasionally a naïve buyer will purchase a chunk of rough gemstone. The piece is of a good size, low-priced, and—as the seller tells him—he “can always have it cut later.” Many consumers don't realize how much color, clarity and especially cut determine a gem's valuation. Not to mention how difficult and expensive it is for a lay person to simply ”have it cut.”

Always be wary of clients who want to insure uncut, unpolished, or unmounted gemstones that are being held for some future use or sale. The intention may be deliberate insurance fraud.

Here's another clue:

A major jewelry insurer told us they've been contacted several times to insure cut and uncut stones being kept in a vault and held as collateral for a loan. The gem caches ranged in value from $100 million to $1.2 billion. The premium on one of those policies would be substantial!

Before writing such a policy, the insurer would want to have their own expert inspect and appraise the stones, with the inspection being paid for in advance by the client. Clients usually back down at this point.

Or how about this for intrigue?

An international insurance expert warns that, when a high-value cache of loose gems is involved, it's likely to be a case of money laundrying. In this scenario, the client pays for the inspection and takes out the policy, paying perhaps a $6 million premium on a $1.2 billion cache of gems. After a short time the client cancels the policy and receives a refund of most of the premium—as clean money from the insurer.

Are you familiar with “the jeweler's prayer”?

Suppose the owner of a loose gem is admiring his purchase when he happens to drop it. The precious object buries itself in the nap of the carpet or hits the floor and bounces—where? Suddenly, the owner is down on hands and knees with very great concentration.

Loose gems are too easy to lose. A commercial jewelry business has dedicated surfaces for examining stones, good safes with controlled access, and strict record-keeping—all of which guard against casual losses. The average consumer has none of these, so insuring his loose gems is a bad risk.

5. How much gold is in gold jewelry?

Investing in gold jewelry is questionable on two fronts. In the first place, the price of gold fluctuates. In the early 80s gold was $750 an ounce; ten years ago the price had dropped to $250. Now, in the midst of an international financial crisis, people are turning to gold and driving the price up, but that's likely to change. Such cycles repeat themselves.

This graph shows dramatic pricing changes over the last few decades. For gold as for stocks, the serious investor has to keep a sharp eye on the market in order to buy and sell at the right time.

Gold in a jewelry item is a special case. According to U.S. law, jewelry sold as karat gold must be stamped with purity markings. Pure gold is stated as 24 karat. With each karat representing 1/24 of pure gold, the gold content of an 18K jewelry item is 18/24 or 75% pure gold. The rest is alloy, added to make the material durable enough to wear as jewelry.

However, it is estimated that half the jewelry sold in the U.S. is of a lower karatage than it is stamped. Most underkarating goes undetected because it's not possible to analyze gold for its karatage without destroying the jewelry in the process. Fire assay, the definitive test, requires melting the metal. (Other methods test only the surface of the metal; they would not detect gold plate or gold fill.)

In any case, jewelry is not like bullion that you'd want to melt down for its gold (and to separate out the alloys). Jewelry derives much of its value from its craftsmanship and design as jewelry, rather than merely from its component metals and gems.

Even though the client may be holding the gold jewelry as an investment, you are insuring it only for its current valuation.

6. Looking for a buyer

When it comes to jewelry, consumers are really outside the marketplace. A consumer who buys jewelry at retail and expects to resell the item at a profit some time in the future is basically in competition with jewelry businesses
and the internet sellers.

This is not an advantageous position to be in, since jewelers buy at wholesale
and internet sites are bargain-oriented. Also, jewelry retailers have a sense of the jewelry market and trends, while the average consumer has not.

A jewelry “investment” that doesn't work out well may turn into a mysterious disappearance. In case of a loss, the insurer is the buyer. This possibility is worth remembering when you are faced with insuring jewelry bought as an investment.


If a client wants to insure jewelry he considers an investment, be cautious. Be especially wary of gems or jewelry bought under unusual circumstances, such as by mail order or while traveling or in a deal through some personal contact.

For “investment” jewelry as for all items of high value, ask for a JISO 78/79 appraisal prepared by a Graduate Gemologist who is also a Certified Insurance Appraiser™.

For quality jewelry, we recommend updating the valuation every couple of years. This guarantees that the valuation is accurate and the premium appropriate.

If you have any doubts about how, or whether, to insure an unusual item, consider consulting a jewelry insurance specialist.


If you have reason to believe the lost jewelry was “an investment,” be especially cautious in settling the claim. Use every means possible to substantiate the quality and value of the jewelry, and utilize your SIU department.

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