January 2017

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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Moral Hazard, Documents
and the Bottom Line

Say a submission arrives with two appraisals. Or with an appraisal and a lab report. Or an appraisal and a sales receipt. Two or more docs can help verify the jewelry's quality and valuation, and one document may fill in details that the other is missing.

It's also possible that information on one doc may contradict or undermine what is on another doc—and that's also useful.

To take advantage of having multiple documents, it's important to closely examine them. Here's how a careful look saved one insurer from a costly error.

Coverage was requested for a ring set consisting of a lady's diamond engagement ring with a wedding band of channel-set diamonds soldered to each side. The submission arrived with 2 appraisals, a GIA lab report, an "appraisal report," and 3 sales receipts. The insurer checked them all. [Note: Identifying information on the submission has been blocked out for privacy.]


Two appraisals for the ring set

Click for enlargements

One appraisal valued the ring set at $39,820. The other, from a different appraiser, valued it at $56,150.

Big valuation difference — 41% !

The appraisals were written only 3 weeks apart, and the later appraisal had the higher valuation.

Was the insured unhappy with the earlier valuation? Did he decide to try for a higher figure?

Both appraisals mentioned a Tiffany & Co. logo on the ring. But the Tiffany logo was only on the engagement ring.

If the attached wedding bands with their channel-set diamonds had been by Tiffany, they also would have carried the Tiffany logo.


Receipt and record of original engagement ring

Click for enlargements

Tiffany records showed that the insured had indeed bought from Tiffany, some years earlier, a platinum ring containing a 1.3 carat round brilliant diamond of I color and VS1 clarity.

This description does not match the stone in the ring at issue here. Neither of the two appraisals mentions a Tiffany inscription on the diamond.


Sales receipt and appraisal for the wedding bands

Click for enlargements

The sales receipt, from the online retailer Blue Nile, showed that the insured had purchased the two bands with channel-set diamonds for $1350 each. The appraisal, also from Blue Nile, valued each band at $2,200.

Even though this Internet seller works on lower margins than a brick-and-mortar store would, this is a generous valuation.


Receipt for a loose diamond

Click for enlargement

This sales receipt shows the purchase of a loose diamond for $36,000 plus a diamond traded in. Neither diamond is described as to size or quality.

It appears that the client traded in the original 1.3 carat diamond from Tiffany for a larger one, presumably the 4.52-carat diamond described on the appraisals. The insurer assumes that the retailer mounted the new diamond into the ring and adjusted the setting to accommodate the larger stone.

The receipt also showed that the client, a resident of the lower 48, had purchased the loose diamond in Alaska, from Blue Diamond [not related to Blue Nile, where the side rings were purchased].

Blue Diamond has outlets in tourist areas in Alaska and Puerto Rico, at ports where cruise lines make regular stopovers for shopping. As we've detailed in our earlier article on cruise jewelry, stores in such heavily trafficked tourist sites are likely to exaggerate quality and inflate prices, knowing that their customers will soon leave port. In fact, vacation jewelry bought in any tourist area is likely to be overpriced. The seller knows that dissatisfied customers have little recourse once they return home.


The evidence indicates:

Click for enlargement

The insured had a Tiffany engagement ring from an earlier purchase. Tiffany round brilliant diamonds are cut to ideal proportions. That 1.3 carat Tiffany diamond, of I color and VS1 clarity, would have had a value of about $10,000.

As described on the GIA report, the 4.52 carat replacement stone from Blue Diamond was three grades lower in color and three grades lower in clarity than the original.

In addition, the replacement diamond was not an ideal cut round brilliant (like Tiffany's) but a modified round brilliant. The GIA report diagram suggests a branded diamond, though no brand name is given. Modified round brilliants generally sell for 20% less than well cut round brilliants, because changing the angles of the facets and their proportions affects the play of light and makes the stone less attractive.


So, what's wrong with the submission?

  1. Appraisals from Blue Nile for the wedding bands were inflated by about 30%.
  2. For the new center stone the client had paid $36,000 plus the Tiffany round brilliant, with its value of about $7,000, coming to $43,000.The insurer determined, through its ITV (insurance to value) underwriting software, that the price of the center stone was inflated. The insured probably could have gotten this ring set for $25,000 to $30,000.
  3. There were two appraisals, with very different valuations: $39,820 v. $56,150. The lower valuation was close to a reasonable one, but the insured wanted coverage based on the higher valuation.

    Underwriters have a responsibility to reduce moral hazard. If the higher valuation were used, it's possible that in the future the insured would discover that he bought an inferior diamond and would have a convenient "loss."

    Since the insured wanted coverage based on the inflated valuation, the application was declined.


The level of documentation in this submission made it easy to determine cut quality and value.

Always ask for the sales receipt. If there is a great discrepancy between the purchase price and the appraised valuation, the purchase price is usually a more realistic indication of retail market value.

The sales receipt also gives information about the seller—which, in this case, turned out to be a popular shopping port for tourist cruises. Be cautious about insuring cruise jewelry, or any jewelry bought on holiday, as vacationers caught up in the adventure of travel can make expensive purchases on impulse, without proper knowledge and without comparison shopping.

Don't be thrown off your guard by brand names. In this case, the jewelry was so adulterated that the Tiffany logo meant little. Also, fake brand-name merchandise is rampant at tourist sites—and on internet sites!

Large retailers often supply with the purchase a boilerplate "appraisal" document that carries an inflated valuation, well in excess of the purchase price. The quality description on such a doc is also likely to be exaggerated, and it may fail to include crucial information, such as cut geometry (one of the 4Cs), color treatments and clarity treatments.

The best appraisals include the JISO 78/79 appraisal form, and are written by a qualified gemologist (GG, FGA+, or equivalent) who has additional insurance appraisal training. One course offering such additional training is the Certified Insurance Appraiser™ (CIA) course of the Jewelry Insurance Appraisal Institute.

For jewelry of substantial size and value, ask for a gem report from a reliable lab.

These are the major trustworthy labs, and you can use these links to verify gem reports you receive.

GIA Report Check
AGS Report Verifcation
GCAL Certificate Search
Gübelin Report Verification

New technology by Sarine is making its way to major labs and the better-equipped retailers and appraisers. The new machines can do color grading, plot the geometry of a stone, measure its light performance, locate inclusions, and the like.


Compare the appraised value with the sales slip. Jewelers are required to hold sales receipts for at least three years, so if the insured doesn't have the receipt, they can contact the jeweler/seller.

If there is a large discrepancy between valuation and selling price, the selling price is likely to be a truer indication of value. When in doubt, adjusters should get a second opinion from their in-house jewelry insurance expert.

Always have damaged jewelry examined by a qualified gemologist (GG, FGA+, or equivalent, preferably one who has additional insurance appraisal training) to verify the quality of the jewelry. This cannot be stressed enough! Just as most auto insurance companies have DRP appraisers for auto claims, insurers should consider using the same kind of procedure by getting their own expert for jewelry claims.


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