April 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

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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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When Is a Pear Not a Pair?

Losing an earring is a common enough occurrence. If you’re inclined to think earring coverage automatically falls under broad form Pair & Set, think again!

Many jewelry items come in pairs or sets, such as earrings, wedding ring sets, or matching sets of necklace and earrings. Should they be covered by a standard or broad form pair & set clause? We recommend limiting jewelry to standard pair & set coverage, and not using the broad form. Here’s why.

If some piece of a set is lost or damaged, a broad-form pair & set clause (sample clause ). requires paying the full amount for the entire set. This inevitably leads to overpayments. The settlement cost is further compounded if the insurer is writing a valued contract.

A standard pair & set clause (sample clause ), on the other hand, allows the insurer to restore the set to its original value by repairing or replacing the damaged or lost piece. Can part of a set be separated out like that? Can a repaired or replaced item really match the original set? Emphatically, Yes.

Here are a few examples from our files.

Duplication Is Easy


Many people (insurers as well as consumers) think that each piece of jewelry is unique, and that part of a matched set could certainly not be duplicated. Often insurers decide to pay the scheduled amount without even seeing the jewelry. Here’s an instance when duplicating the lost earring would obviously be easy. The cost to the insurer would have been $150. Instead the company paid the full limit of liability for the pair.

Overpayment: $1,250

Just Replace the Stone


Both rings were claimed as a damaged “wedding set” when a stone was lost from the engagement ring. In jeweler terminology, a wedding set consists of two rings designed to fit together such that each would be incomplete without the other. These two are just separate bands and should not have been treated as a set. In any case, the lost stone could have been replaced for a fraction of the scheduled amount (for both rings) paid out by the carrier.

Overpayment: $2,457

Never Assume It Can’t Be Done


This white gold earring, shown in three views, may appear to the insurer as intricate and tricky to duplicate, with its “forty-seven bead-set round brilliant diamonds.” But a jeweler could have supplied its mate for a bit over $300. Instead, the insurer paid the policy limit for the pair.

Overpayment: $1,684

It’s Not Pair & Set


These two pear-shaped pink diamonds were on either side of a center stone in a ring. One of the diamonds became damaged. The insurer treated the loss as pair & set, paying out $26,500 to replace both stones. This was an unfortunate, and expensive, decision for three reasons:

  1. This loss was not a pair & set at all. It was simply one damaged stone, and a match for the undamaged diamond could have been made.
  2. Analysis of the appraisal showed that the ring’s value was inflated by about $10,000. A jewelry expert working for the insurer could have examined both the jewelry and the appraisal, and recognized this discrepancy before the settlement was made.
  3. The damaged diamond could have been replaced for about $5,000.

Overpayment: $21,430

Prelude to a Scam

The “King Solomon’s Gems Collection” started with one large uncut, unpolished sapphire found in a shoebox. Over a few years eleven more stones were added, until the group was eventually appraised at more than $160 million. When a broker attempted to insure the batch, asking for broad form pair & set coverage, jewelry insurance experts sensed a setup for fraud. They suspected that one of the stones would eventually “mysteriously disappear” and the insurer would be out $160 million.

Their caution was well-founded. It turned out the stones were grossly overvalued, and the appraiser lost his American Gem Society membership. There were several red flags in this case, but one of them certainly was that an accumulation of uncut stones should for no reason be insured as a “set.”

An Unusual Case


Click to enlarge

Occasionally a situation arises where broad form pair & set coverage should be considered. These 10 watches were made in 1994 on special order from an Oriental royal family. Their design is based on early self-winding watches created by the House of Breguet in France. Made of 18-carat gold and elaborately fashioned, each watch represents a different animal motif inspired by the Chinese zodiac and folklore. The set is unique.

Insuring these watches would call up several considerations: Since they were produced in 1994, perhaps the manufacturing company would still be in business at time of loss and able to make a replacement (or perhaps not). The cost of replacing one watch would be more than one-tenth the value of the set, but how much more? If one watch were lost and irreplaceable, how would that affect the value of the set?

In this situation, a carrier might consider broad form pair & set coverage, but such cases are rare.

FOR AGENTS & UNDERWRITERS

We recommend limiting jewelry coverage to standard pair & set coverage. In the vast majority of cases, making a mate or even just replacing a lost stone will restore the set to its previous value.

Be sure to have on file a detailed appraisal, preferably ACORD 78/79, as well as a photograph of the jewelry.

FOR ADJUSTERS

Take advantage of the unique opportunity available when a loss occurs from a pair or set: Always have the remaining jewelry inspected by a jewelry expert working for you.

Such inspection:

Never assume that a mate cannot be made. Get the opinion of a disinterested jewelry expert.

Do not take the word of the original selling jeweler or of replacement companies. They are likely to encourage the assumption that duplicates cannot be made because it’s in their financial interest to sell a complete new set, rather than replace a single piece of the set.


Sample Clause:

Standard Pair & Set clause:

Pair, set or parts other than fine arts

Broad Form Pair & Set clause:

If the scheduled article or property is a pair or set, or consists of several parts when complete, we will pay the full amount shown in the Schedule for that pair, set or complete article. At our request, you will surrender that article or property to us if not lost or stolen.


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Broad Form Pair & Set clause:

If the scheduled article or property is a pair or set, or consists of several parts when complete, we will pay the full amount shown in the Schedule for that pair, set or complete article. At our request, you will surrender that article or property to us if not lost or stolen.

Standard Pair & Set clause:

Pair, set or parts other than fine arts

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