June 2009

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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Color-Grading Diamonds

What color is a diamond? No one talks much about the color of the diamond in their engagement ring. If it's not a fancy color — say pink or blue — it's colorless and it sparkles. Isn't it really carat weight that matters anyway? What's all the fuss about color grading?

For most of history, diamonds were so rare that grading their color didn't much matter. In 17th century India, diamonds were color-graded at night, by lamplight—not ideal conditions for distinguishing subtleties.

As diamonds became more accessible, their color grew to be an important consideration in valuation. But describing lack of color is a problem. In the late 19th century, graders used metaphorical terms, like "river" or "water," for the purest, most colorless diamond.

Or the color was named after a geographical location where similarly colored diamonds were found. "Cape," used for diamonds from the Cape of Good Hope region, is still in use today to refer disparagingly to pale yellow diamond. Such designations are general, at best. What the diamond industry needed was . . .

A "color yardstick"

Today, diamond grading has come a long way from flickering lamps and poetic designations. If you've ever glanced at a GIA diamond report, or at the back of a JISO Jewelry Appraisal form, you've seen the D-to-Z color grading chart established by the GIA (Gemological Institute of America). The illustration includes the AGS scale, also in wide use, but the GIA scale is considered the international standard.

The quest for a "color yardstick," as it was described in the 1940s, began in earnest in the mid-20th century and has been perfected over the years. Letter grades eliminate the use of ambiguous and idiosyncratic terms.

The GIA system ranges from colorless (D) to increasingly yellow, or "off color," diamonds. The GIA scale began with D to avoid confusion with earlier, less stringent, grading systems that used grades like "A" and "AA."

Accurate use of the D-Z system depends on a set of master stones precisely graded by GIA. The gemologist compares the diamond in question to stones in the master set, and arrives at a grade.


Master stones, with their corresponding GIA color grade

 

It sounds easy enough—but then, there's the light. That flickering oil lamp is not like daylight. Light in the morning is not the same as at high noon. Summer's light is not like winter's. Incandescent light is not like fluorescent. Ambient colors also matter—reflections from the walls, or other objects on the table, or the grader's clothes.

Since the presence of even the slightest tinge of color is what's at issue, the influence of ambient colors must be minimized. If the system is to be a standard, the light and viewing conditions must be the same for all graders.

GIA's Diamond Light viewing box

To address the situation, technicians began working on a viewing box that would provide a standardized viewing environment. Over the years, they experimented with various kinds of lighting to simulate ideal daylight, adjusted the size and shape of the box, and developed various inside coatings to reduce glare and reflection. Today's viewing boxes create optimal conditions for comparing a stone to the master set of graded stones.

Why does it matter?

As usual, the answer is money. This chart compares the values of two 1-carat diamonds, alike in clarity (IF, or internally flawless) and cut (very good), but one color grade apart.

Color Grade
Clarity Grade
Supplier Cost
Retail* Price
D
IF
$18,000
$27,000
E
IF
$12,600
$18,900

*This example assumes a typical markup of 50%.
We often see appraisals at three times (or more) the cost of the diamond.
We consider such valuations inflated, and you should, too.

 

As we see, a difference of just one color grade means a huge difference in price.

To accurately grade a diamond's color, the jeweler/appraiser must have not only the proper training and a good eye, he must also have the necessary equipment in his gem lab to do a proper analysis.

The potential for fraud is great. It is very easy to exaggerate a color grade, since a one-grade difference is not visible to the naked eye. As you can see from this comparison, even greatly magnified diamonds that are several grades apart can look similar, though their difference in value could be thousands or even tens of thousands of dollars.

So the appraiser must also be trustworthy, both in terms of training and honesty. A mistake of even one color grade — or a deliberate inflation of the grade — can be very costly to the buyer and, in case of loss, to the insurer.

Color—and the other 4 Cs

Color is only one of the 4 Cs that affect the value of a diamond. The others—Clarity, Carat weight, and especially Cut—also figure in.

The accuracy of each grade on the appraisal
each of the 4 Cs—
dramatically affects valuation.

FOR AGENTS & UNDERWRITERS

Be sure the appraisal completely describes the jewelry, including the 4 Cs of  diamond. If information is "left out" of the appraisal, either through carelessness or deceit, you can be sure the error is not in favor of the buyer/insurer.

JISO jewelry appraisals prompt the appraiser for all information. These appraisals guarantee that the jewelry has been examined in a gem lab and graded by the appraiser signing the form.

Especially for high-value jewelry, recommend that your clients secure a JISO 78/79 appraisal.

Certified Insurance Appraisers™ (CIAs) are graduate gemologists who have had additional training in appraising for insurance. CIAs are qualified to write JISO 78/79 appraisals.

If a CIA is not available, ask your client to have the selling jeweler complete JISO 805 or to have any jeweler/appraiser use JISO 806.

For high-value diamond jewelry, you should get a diamond report in addition to an appraisal. Be sure the report is from a reliable lab.

To check the authenticity of a diamond report from these reliable labs, follow the appropriate link:

GIA Report Check
AGS Report Verification
GCAL Certificate Search
Gübelin Gem Lab

FOR ADJUSTERS

When pricing a replacement, give the replacing jeweler all descriptive information from the appraisal and other documents. Do not give the valuation. The replacement price should be based on the quality of the jewelry (as described on the appraisal and lab report), not on your limit of liability or on the original purchase price.

Trust only diamond reports from reliable labs. Use the links above to check the authenticity of a report.

If the report is not from one of the respected labs listed above, compare the report's description with the description on the appraisal. Compare the valuation with the purchase price, if available. When a large settlement is at issue, it could be worthwhile to consult a jewelry insurance professional to help determine the true quality and value of the jewelry and avoid a large overpayment

 

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