June 2002

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

2017

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

2016

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

Bigger & Bigger Diamonds - October

Scam season is always NOW - November

Ocean Diamonds - December

2015

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

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

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

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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Dealing with Damaged Jewelry:
Don't Pay for Nature's Mistakes

Unlike a total loss, damaged jewelry is still there, holding clues that can benefit the insurer. Take advantage of this!

Overpayment on claims for damaged jewelry is more the rule than the exception. The policyholder may take the jewelry in for cleaning and be told by the jeweler that it is damaged. The adjuster may just take a jeweler's word for assessment of the damage and cost of repair. This scenario can be unnecessarily expensive.

We recommend two steps in dealing with damaged jewelry:

The first step is to determine your exposure. For scheduled jewelry, this is the insured value. For unscheduled jewelry, it is the applicable replacement cost. As with auto damage, the adjuster should compare the repair cost to the replacement cost. With jewelry, most repair costs will be significantly below the limit of liability.

The second step is to have the damaged jewelry examined by an independent expert, a jeweler trained in gemological skills, who has a gem lab and who is trained in appraising for insurance. This important step is often overlooked by insurers.

Why is examination by an independent lab important?

It can save you money.

Recently JCRS handled salvage diamonds from insurers on damage claims already settled. Here's how the numbers came out:

Sample Damage Claims
Limit of
Liability
Amount
Paid
Actual
Replacement Cost
Carrier
Overpayment
$5,000
$3,935
$1,650
$2,285
$8,250
$7,660
$4,000
$3,660
$15,000
$15,000
$8,825
$6,175
$5,500
$5,500
$2,400
$5,500

Notice in particular the last example. The insurer paid out the full limit of liability — but a lab exam revealed that there was no damage to the stone. The diamond was an "indented natural." It had grown that way and was not subsequently chipped. The insurer should have paid nothing at all!

In the other examples, the insurer accepted the replacement amount charged by the jeweler. The replacement was based on the appraisal and other documents on file. The damaged stone was not independently examined.

Because so many appraisals lack descriptive details, having a damaged stone examined in a gem lab will almost always yield valuable information. The exam may reveal that a stone has been subjected to treatments, such as fracture-filling, that make it vulnerable to breakage. Such treatments should have been revealed on the appraisal (but often are not).

Sometimes a gem lab exam can determine the cause of the damage. Faulty workmanship or inherent vice in the stone are not covered by insurance. (However, it is rare to be able to tell for sure that these situations were the cause of the damage.)

Ask the gem lab to give a complete description of the jewelry on an ACORD 18 form. The adjuster can then use the lab's ACORD 18 report to check the accuracy of the appraisal on file. Such a complete description of the jewelry, including details often left off an appraisal, is important in pricing a replacement/repair.

It is the carrier's responsibility to make the insured "whole." When a loss is total, you must rely on the appraisal and other documents on file, but with a partial loss, the damaged stone can be easily inspected. A lab inspection may reveal that the quality of the piece was greatly exaggerated. The carrier is responsible for repair or replacement of the actual stone, not the stone the customer may have thought he bought. It is worth the comparatively small inspection fee to be sure of the gem's qualities.

A lab report showing exaggerated valuation may even prove useful to the policyholder. If he is still making payments on the jewelry, the customer can use the lab report to request adjustments on future payments. This is a value-add for the policyholder, and the fear of accusations of fraud may lead to better appraisals in the future.

If a lab exam uncovers a major discrepancy between the insured value and the quality of the piece, it may be advisable to send the gem to the GIA for a second independent analysis. The Gemological Institute of America is regarded as the ultimate authority in determining gem qualities (as discussed in the March 2002 issue of IM News). In the event of a dispute, the impartial GIA report should eliminate the need for a referee between experts. It is well worth the price to avoid paying out a greatly inflated value.

The gem lab should also be able to aid in estimating the salvage value of a damaged stone and offering other options. For example, in one recent case a jeweler offered an insurer $1,000 for a damaged stone. A lab suggested that it was possible to recut the stone and produce a gem that could sell for $4,000. The cost of recutting the stone was $400, and the insurer must bear that cost. In recutting a stone, there is always a chance that the stone will break. If that happens, the owner (in this case the insurer) is out both the stone and the cutting fee. The insurer can weigh the options. Simply selling the stone for salvage carries no risk but brings lower profit. In the case cited, the stone was successfully recut and subsequently sold, much to the insurer's advantage.

FOR AGENTS & UNDERWRITING

For jewelry of substantial value, it's best to have an ACORD form 78/79 appraisal. ACORD 78/79 gives a complete description of the jewelry, including any treatments, inherent vices or flaws in workmanship that might lead to future breakdown for which the insurer would not be liable. The description is guaranteed to be accurate because it is based on a gem lab inspection by a trained gemologist who takes full responsibility for his work. The ACORD 78/79 also guards against inflated valuations, since the valuation is based on what the jewelry sells for at that jeweler/appraiser's store. This appraisal recognizes the insurer as a party to the appraisal.

For items of lesser value, for which insurers would not require an appraisal, we recommend the new ACORD 805. This is not an appraisal but a Jewelry Sales Receipt for Insurance Purposes. The descriptive content however is the same as in ACORD 78/79, but it is intended to be used by jewelers who do not meet the higher education and training requirements set forth in the ACORD 78/79 appraisal standards.

FOR CLAIMS

With any damaged item that could lead to substantial claim payment, it is best to have the piece examined by a professional gemologist in a gem lab.

For a lab inspection, give the entire item to the lab. Do not give the lab any details about the policyholder or how the damage occurred. Ask for a complete description of the gem on an ACORD 18 form. Ask the lab to estimate the cost of repair, to help you determine whether to repair the item or replace it. Do not indicate that you will hire this lab to do the repair. Also ask for an estimate of the salvage value of the damaged stone.

Use the information from the lab's ACORD 18 report to determine the accuracy of the appraisal on file.

If the cost of repair is so high that you choose to replace the item, use the information on the ACORD 18 form to price a replacement. Shop around for the lowest bid.

 

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