October 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

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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TV Shopping for Jewelry—
Get It While They Last!

Home shopping channels reach an estimated 90 million households in the U.S.  A good chunk of their sales involves jewelry. They thrive on speed and excitement, and sometimes details get lost in the hype. One of these details is Valuation.

TV shopping puts out a fast-paced pitch for a quickly changing target. The hostess oohs and aahs, puts the ring on her finger, and a close-up shows that sparkling stone big as your screen. Satisfied customers call in to praise the beauty of the current offering and testify to their happiness with former purchases. The price sounds like a bargain, the clock is ticking, and there are only a few left!

Jewelry Television™, one of the biggest players, sells only jewelry, 24 hours a day. They claim to be the largest retailer of loose gemstones and they count on moving merchandise quickly.

Here’s a typical offering from JTV’s “Fast & Furious” show special:

A peridot ring for $99, which the hostess says contains $288 worth of gold. She then adds matching earrings, valued at $149, offering all three pieces for the same $99 price. The replacement cost is given as $650. A counter onscreen shows how much time is left to make the purchase, the seconds ticking away.

Some shows, such as GemsTV™, specialize in an auction format. A piece is offered, in limited quantity, at a “start price”—and the price goes down as pieces are sold. In the end all buyers pay the last (lowest) price, but if you wait to see how low it will go, you may be too late and they’ll sell out.

Like many shopping shows, GemsTV™ has a Web site. Two screen shots are shown below. The block that appears here as black would, online, be showing live broadcast of the TV show. The section to the right shows a recent sale.

In these examples, a ring that began at $5,558 sold for $359. Another that started at $3,022 went for $177.

We can assume that the sale price is closer to the jewelry’s true value. But if an appraisal is included with the sale, what valuation does it give??? 

Home Shopping Network is the #1 shopping channel in terms of revenue. HSN® also has a Web site. TV viewers are told: If the line is busy, go to our Web site.

We checked out some of the higher-priced offerings.

The 1.5ct pear-shaped diamond in this ring is described as H-I color (some color visible to the naked eye) and I1-I2 clarity (inclusions may be visible to the naked eye). Though this is not a high-quality diamond, the difference in price between H and I color is still significant, as is the difference between I1 and I2 clarity, so this loose grading builds in some “flexibility” in valuation. No information is given on cut proportions, which greatly affect a diamond’s value. Such vague or missing descriptions are typical.

Based on the descriptive information available, our calculations show that this ring could retail for anywhere between $3400 and $8900. If the piece is at the high end of quality, the selling price of $8500 was a good deal; if it’s at the low end, the buyer might have paid more than twice its retail value.

The Web site is also a good place to check information. On the air, the enthusiasm of the host takes over. Cultured pearls are called natural. The host says, “The gold alone is worth $900!”. He gives a replacement cost of maybe triple the price. One host said of the tiny diamonds surrounding a central pearl, “Look how well matched they are!” Such comments raise the energy for fast TV sales, but on the Web site they don’t appear.

Reasonable prices seem to be generally the case. One manufacturer who contracted with a shopping channel for a large number of pieces said the jewelry was offered to viewers at bargain prices and sold quickly.

He also noted that the shopping channel never loses money. If an item isn’t selling fast enough, the show moves on to something else. If an item sells too fast, they’ll continue taking orders — but they don’t order more product from the supplier. They just send a letter to the potential customer saying, “Sorry, we’re sold out. Next time buy sooner.”

The Valuation Issue

Unlike eBay jewelry sites, which we discussed last month, TV shopping does not seem to use high appraisal valuations as an inducement to buy. (A replacement-cost document may accompany the purchase, but it’s not an advertising lure.) Instead, a high “start price” — like a host’s enthusiam or the testimonials of previous buyers — suggests to viewers that this is a great deal.   

The JTV site offers an appraisal for $50, but it does not name the appraiser or lab it comes from (reminder to insurers: not all labs or appraisers are reliable!) and it doesn’t give the appraised valuation. Perhaps the caution about announcing valuations is because the airwaves, unlike the Internet, are controlled by the FCC.   

Some on-air hosts are said to hold “Accredited Jewelry Professional” certification. This sounds impressive but comes after just three classes by mail aimed at teaching retailers how to talk about jewelry to customers. (It is not a gemologist degree and does not educate one to appraise jewelry or assign valuations.) The title is meant to give the viewer confidence in the seller.

The customer is similarly reassured by the offer of an appraisal and the money-back guarantee. Buyers are unlikely to seek another appraisal after the purchase — unless the insurer asks for one—so the accuracy of the jewelry’s description or valuation may never be challenged.

We looked at some of the major shopping shows, but other shows, including local ones, are always springing up. Abuses are more likely as the shows become more common and more competitive. The home shopping shows we viewed generally sell jewelry at reasonable prices, much of it low-priced jewelry that usually wouldn’t be separately insured. Only the occasional high-priced item would be up for scheduling.

However, as always with high-value jewelry, the insurer must be vigilant.

A Final Cautionary Tale

One jeweler recently notified us of an egregious case of inflated valuation. A customer brought in for appraisal a ring she’d purchased on a TV auction. It had come with an appraisal, from a Bangkok lab, valuing it at a stratospheric $68,750. The U.S. jeweler, who is a Graduate Gemologist and Certified Insurance Appraiser™, prepared a detailed appraisal on JISO 78. The true valuation, the realistic current replacement cost, was $2,000.

$68,750 vs. $2,000! Let that flagrant valuation discrepancy remind you of the importance of getting a second appraisal, from a reputable gemologist, on all high-value jewelry.

FOR AGENTS & UNDERWRITERS

For all high-value jewelry, ask for a second appraisal on JISO 78/79, written by a Graduate Gemologist who is also a Certified Insurance Appraiser™.

Always get a copy of the sales receipt — expecially for jewelry bought from TV sales and auctions. TV sellers may make claims about high value, and the reverse auctions may start at a high price, but the merchandise is generally low-quality jewelry at a low price.

FOR ADJUSTERS

Be suspicious of appraisals, lab reports, or other documentation supplied by the seller. Often crucial information is left out, such as cut information and gem treatments.

For example, one TV shopping show states, in a general description of diamond on its Web site, that diamonds are often irradiated. It’s probably true that the diamonds they sell are irradiated. However, this treatment lowers a diamond’s value and should be specifically stated on the appraisal.

If there is a large discrepancy between purchase price and valuation, the purchase price is a better indication of the jewelry’s true value.

In the absence of a detailed appraisal on JISO 78/79, make every effort to determine where the jewelry was purchased. This information can often help pin down details of the jewelry’s qualities and lead to a realistic valuation.

 

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