September 2007

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

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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DANGER!  eBay Jewelry "Bargains"

Everyone shops on eBay these days because you can get such bargains. But when it comes to jewelry, Buyer Beware, and also Insurer Beware!

Let's jump right in.  Here's a ring valued at $14,833 that sold on eBay for $400! There's a lab report to support the jewelry's value and a happy customer at the end of the sale.

Example from eBary

Neimans advises customers to "have realistic expectations." About its lab report, the seller says, "The Estimated Replacement Value is for insurance purposes only to obtain insurance coverage. . . . Please do not confuse Replacement Value with Appraised or Market Value, as they are not the same."

No kidding! Who made up that estimated value? Is it realistic to expect that a purchase from a jewelry retailer is worth 37 times the sale price? While we're at it, the USGL "Official Gem ID Card" attesting to the ring's value is said (in the lower right corner) to be a "$50 to $150 Value!"

The high valuation seems designed as a perk for the buyer (at the expense of the insurer). Actually, both buyer and insurer lose.

Close examination of the lab's ID card shows that some crucial information is missing, such as cut dimensions. Also, the clarity of the main diamond is given as "opaque", though diamonds should be "transparent" — even black ones. These red flags are enough to make a trained gemologist suspicious of this valuation, even without seeing the jewelry itself.

A jewelry insurance expert would also know that reports from reliable labs, such as GIA (Gemological Institute of America) or AGS (American Gem Society), do not include valuations. Their job is to describe the gems accurately and completely, not to function as a sales tool. Any lab report (certificate, ID card, etc.) that includes valuation is suspicious. In this case, the huge difference between "estimated replacement value" and sale price suggests a grossly inflated valuation.

eBay buyers are encouraged to give feedback about the seller, a practice intended to keep sellers honest. For most big jewelry auction sites, the feedback is 97-99% positive. This sounds good. But a close reading shows that an extraordinary number of the positive comments are a version of "order arrived on time, jewelry was nicely packaged." Most likely the buyers never have the jewelry independently appraised, to see whether it is as advertised.

The Brandishing of Brand

Buyers regularly look to eBay for brand-name merchandise at rock-bottom prices. Here's a statistic to conjure with: estimates are that 50% to 90% of the famous name products advertised on eBay are counterfeit. That includes artworks, designer clothes, makeup, software, collectable coins, electronics, DVDs, golf clubs...and, of course, jewelry.

A seller of knockoffs may copy sales receipts of the genuine article to prove authenticity or sell a used item as new. Some jewelry sites sell "Tiffany-inspired" jewelry. Others blatantly advertise and sell replicas of name brands.
 
eBay will remove any auction site that violates trademark laws — if the offender is brought to their attention. Monitoring the auction sites for counterfeits is expensive and time-consuming, so manufacturers tend to object only when customers complain to them about products bought on eBay.

Trademark holders feel it's eBay's responsibility to prevent the sale of misrepresented products. EBay claims it is only a marketplace, like a flea market. With 60 million items being sold at any given time, and 3.5 million new auctions every day, it cannot police everything.

Things may be coming to a head. Tiffany has filed suit against eBay for trademark abuse, claiming eBay is directly and indirectly assisting counterfeiters. This is after Tiffany had forced eBay to shut down 19,000 auction sites. It had randomly purchased "Tiffany" jewelry and found only 5% of it was genuine.

Tiffany recently won a suit against Starglam Inc., a major seller of fake Tiffany wares on eBay. If the Tiffany suit against eBay itself is successful, legal actions by other manufacturers are likely to follow.

Who Sells on eBay?

Although a good buy is possible from an individual, sellers may not even know what they're selling. Misrepresentation of jewelry quality, or even kind, is rampant. Sellers loosely throw in terms like vintage, genuine, excellent, synthetic, simulant, semi-precious. One gemologist interviewed in a "20/20" investigation described the poor-quality jewelry from eBay as what "we [gemologists] sometimes in slang refer to as frozen spit." Another expert said the clarity of the gems was so low "they should have been ground up for sandpaper."

eBayAd

Not only can anyone sell on eBay, anyone can set up an official-looking jewelry site. eBay spam promises to make you a millionaire. There are "toolkits" for sale and for free to help you start an eBay business. Jewelry suppliers will let you select items from their site (at "below wholesale" prices) to show on your own web site and price however you want. You don't have to buy anything until you make the sale, then they ship to you and you ship to your customer. You set your profit margin, refund policies, type of payments you accept.

No knowledge of jewelry necessary, no investment in inventory, no reputation for honesty or expertise. Just set up a Web site and they will come.

FOR AGENTS & UNDERWRITERS

Red flags:

If the answer to any of these questions is Yes, and the jewelry is high-priced, insist on an appraisal from an independent appraiser who is a Graduate Gemologist (GG) and, preferably, also a Certified Insurance Appraiser™(CIA).

Always ask for the sales receipt. A huge discrepancy between selling price and valuation is a strong indication of inflated valuation.

Lab reports, official-looking Certificates, Gem Identification Cards, or any other such paperwork supplied by the seller (from eBay or otherwise) are usually just sales tools, with exaggerated qualities and inflated valuations. Do not trust them.

As you go through renewals, keep an eye out for policies based on USGL valuations. Since these valuations are likely to be wildly inflated, consider having the policyholder provide an appraisal from a reliable independent appraiser.

Trust only certificates from reputable labs, such as GIA and AGS.

Scheduled jewelry should have an appraisal from a GG, preferably a CIA™.
 
Don't take brand names at face value. These days, everything can be counterfeited. Many trademark brands, such as Tiffany and Rolex, sell only through authorized dealers, never online. If a high-price item is bought online, or if you suspect it may not be genuine, insist that it be authenticated by an authorized dealer in that merchandise. You don't want to have to replace a cheap knockoff with a genuine item down the line.

Encourage clients to get an independent appraisal from a qualified gemologist as soon as possible after an online purchase. Point out how an appraisal's accurate description and valuation benefit them: 

FOR ADJUSTERS

Was the jewelry purchased on eBay (or anywhere on the internet)?
If so, be very suspicious of the stated quality and valuation.
 
Is the valuation far higher than the sale price?
Most likely the true value is closer to the sale price than to the stated valuation.

Is the valuation on a printed certificate/report/ID card supplied by the seller?
Disregard this valuation. Try to determine value based on descriptive information and sale price. 

If necessary, consult a jewelry insurance expert to help determine value. Valuations from eBay jewelry auctions are often grossly inflated.

Is it a brand name?
Look for evidence of authenticity. Some manufacturers sell only through authorized dealers. Merchandise bought online (or from other unauthorized sources) may be used, or may be altered with cheaper parts, or may be a complete knockoff wearing an important logo.

Have all damaged jewelry examined in a gem lab to be sure the quality is as stated. For brand-name jewelry, have the piece examined by an authorized dealer to ensure all parts are authentic.

 

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