March 2006

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

Moral Hazards on the rise - September

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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How Big are Diamonds, Anyway?

The insured loses a "5-point diamond!" How concerned should you be? Here's a little perspective on size — and price.

If there's one thing people think they know about diamonds, it's that bigger is better. It follows that bigger would be more expensive, but the relationship between size and price is not as direct as one might think.

What exactly is a carat?

The word carat comes from the carob seed, which was used as a measure in ancient India (where diamonds were discovered) because it was small and consistent in weight. A carat weighs 1/142nd of an ounce. That is, 142 carats = 1 ounce. You could mail a gross of one-carat diamonds (a gross = 144) for about the price of a postage stamp—though we don't recommend that you do this! But from this perspective, a carat isn't much at all.

Diamond weights below a carat are given in points, a carat having 100 points. A "50-point diamond," though it may sound quite impressive, is one what weighs half a carat.

How big is a diamond?

Diamonds come in a range of sizes, from one point right on up. Oddly enough, though, a diamond the weight of a carob seed is most popular these days. One-carat diamonds are so sought after, in fact, that one way for customers to get a bargain is to shop for a diamond that's a point or two under one carat. Since most people want a carat or more, these just-under-a-carat stones are often priced to move. And really, can you tell the difference between 1.00ct. and .98ct?

Extraordinarily large diamonds are rare, and they become increasingly rare as large diamond rough deposits are mined out. The few big diamonds we know about are famous not only for their size and beauty, but for the history that goes along with them.

The Cullinan Diamond, found in South Africa in 1905, weighed in at a pound and a half, a startling 3,106 carats. That was twice the size of the largest diamond found before. The stone was presented as a gift to King Edward VII of England.

Cutting the Cullinan was a major event. Experts took three months just to decide how to cut it, what shapes to give the finished gems in order to maximize yield from the rough. Eventually, the Cullinan yielded 9 major stones, 96 brilliant cut diamonds, and 9.50 carats of unpolished pieces. The total weight of the cut stones was 1,065 carats, representing a 65% loss in cutting. A large loss of material is inevitable in cutting rough material to produce gems of highest beauty. (Read more about how cut quality affects the value and beauty of all diamonds.)

The largest stone cut from the Cullinan, a 530.20-carat diamond known as the Star of Africa, was set into the British royal scepter. The other gems from the Cullinan eventually became part of other jewelry belonging to the royal family.

A more contemporary tale is that of the Taylor-Burton Diamond. In 1972, Richard Burton gave Elizabeth Taylor a pear-shaped diamond weighing 69.42 carats. The piece had been purchased at auction in 1969 for $1.05 million, the highest price ever paid for a diamond at that time. Ten years later, following her divorce, Taylor sold the diamond for nearly $5 million.

How big for how much?

With gems, there's size and then there's apparent size. When we look at a diamond set in a ring, we're usually seeing it from the top. Much of its size is not visible. These pictures, comparing well-cut round brilliant diamonds as seen from the top, illustrate how doubling the carat weight does not double a stone’s visible size.


But it's the visible size that customers want to be large. Diamonds may be cut to look big and meet customer demand, but this is always done at the expense of the stone's beauty.

Huge and unique diamonds are priced according to rarity, history, cachet and what someone is willing to pay. Smaller diamonds have a more regularized pricing, though it is complex and dependent on many variables.

Diamonds are not simply so-much-per-carat, the way gold is so-much-per-ounce. That is, a two-carat diamond is not simply twice the price of a one-carat diamond or four times the price of a half-carat diamond.

Large rough stone deposits of diamond are rarer, so larger diamonds cost more per carat. Also, as noted above, better cut proportions mean more weight loss in the cutting, and this is also reflected in the price.

This chart is merely for comparison, to illustrate how dramatically the size of a diamond affects its price. These are approximate supplier costs, not what a customer or insurer would pay.

size
supplier's approx.
cost per stone
supplier's approx.
cost per carat
  1 point (.01ct)
$ 5
$ 500
  ½ carat (.50ct)
$ 1,100
$ 2,200
  1 carat
$ 5,000
$ 5,000
  2 carat
$17,000
$ 8,500
  5 carat
$65,000
$13,000


Diamond prices also vary considerably according to the other 3 Cs — color, clarity and cut. For this comparison, we've assumed all the diamonds are H color, VS2 clarity and good cut. But the slightest change in any grade, either up or down, can make a big difference. Of course, prices also vary over time.

It's reasonable to expect the jeweler to make a profit. The jeweler's markup, and therefore the buyer's price, will vary greatly from one retailer to another, especially with big box retailers and internet sites competing with independent jewelers. It's worth comparison shopping for the best price, and it's essential to deal with a trained and honest jeweler who will not misrepresent his goods.

FOR AGENTS & UNDERWRITERS

Although the subject of this newsletter is carat weight, remember that size is not the most important determinant of value for diamonds. Be sure the appraisal also includes complete information on color, clarity and especially cut. The insurance industry's standard Jewelry Appraisal JISO 78/79 (formerly ACORD 78/79), prepared by a Graduate Gemologist who is also a Certified Insurance Appraiser™, will give all necessary details.

Today, a diamond certificate/report from an independent lab (such as the Gemological Institute of America) often accompanies a purchase of diamond jewelry. Your files should include that report, not just the appraisal referencing the GIA report number.

FOR ADJUSTERS

In reviewing the appraisal, be on the lookout for "approximate" weights. This term indicates that the appraiser examined the stone in its setting and could not weigh it alone. The appraiser took measurements and put them through a mathematical formula that approximates weight. These approximate weights can be checked and verified by consulting a jewelry insurance expert.

An approximate weight leaves wiggle room for the replacing jeweler. He may go down a couple of points, suggesting that it is still close to the weight of the original. As the chart above indicates, a few points difference in weight can mean a significant difference in the price for you.

Always have damaged jewelry inspected in a gem lab to verify its qualities. The examination should be done by a Graduate Gemologist who is also a Certified Insurance Appraiser™. If stones have to be removed before doing the repair, have any loose stones over half a carat examined.

Remember that size is not the only, or even the most important, thing in valuing diamond. A replacement price should reflect ALL qualities of the original, including color, clarity and especially cut. It is essential to deal with a trained jeweler, preferably a GG who is also a CIA™, who will not misrepresent his gems or pricing.

A piece of jewelry may contain a lot of small diamonds, perhaps a couple dozen 1- or 2-point diamonds. And they may be of poor quality (often appraisals do not even mention the quality of very small diamonds). It's easy for an unscrupulous jeweler to take advantage of the word "diamond" attached to those tiny gems and overcharge you for these inexpensive commodities. Work with a jeweler you can trust or with an insurance gem lab providing specialized services to adjusters.

 

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