May 2010

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


What's a Certified Appraiser? - January

Best Appraiser Credentials - February

Are the diamonds you’re insuring real? - March

Handwritten Appraisals - April


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

Hurricanes, fires, floods—and jewelry insurance - October

Inherent vice / wear-and-tear losses are rising - November

FRAUD UPDATE – lack of disclosure, false inscriptions & doctored docs - December


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


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


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


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


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


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


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


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


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


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


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


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

Grading the Color of Colored Diamonds

New GIA Cut Grade for Diamonds - December


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


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


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


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


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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The Corundum Spectrum

Gem corundum—ruby and sapphire—used to be a fairly rare and comparatively high-priced colored gem. Today corundum accounts for about one-third of the colored gem sales in the world, and its prices are all over the map.

Gem corundum occurs in a wide range of colors—red, yellow, green, purple, blue, pink, orange, brown, etc. Red corundum is called ruby; all other colors are sapphire.

Politics, technology, fashion, media, ethics, international trade, environmental concerns, the global recession all play their roles in corundum’s story. All go into affecting the gem’s value in the marketplace and therefore its valuation on a jewelry schedule.

Purple Sapphire Ring

Ruby and sapphire have been appreciated for thousands of years as rare and precious gems. They’ve become remarkably less rare since the 1980s, when technicians developed heat treatments that turned previously worthless corundum into attractive gems. Gem cutters and dealers began heat-treating low-quality corundum in large quantities and eventually were able to produce attractive sapphire and ruby for very low prices.

Their success increased demand. Mines that had been exhausted of high-grade corundum could now be mined for gem rough that was “treatable.” In fact, most ruby and sapphire mined today requires treatment to be salable at all. Natural untreated ruby and sapphire are increasingly rare and their prices are high.

Sapphire jewelry from for under $15.

Soon TV shopping channels and the internet entered the scene. These became the perfect outlets for reaching potential buyers of low- and mid-priced jewelry. Many jewelers will not carry gems of low quality, but on the net there are numerous sites that specialize in low-priced jewelry with treated, or enhanced, gems, often accompanied by grossly inflated appraisals.

12 carat sapphire ring

Some of the Best

Colored gemstones (unlike diamonds) acquire a characteristic appearance based on the locale where they were mined. The conditions under which the gems grew, other minerals they encountered, leave visible traces that can profoundly affect their beauty, and therefore their price.

Kashmir Sapphire

Classic Kashmir sapphire is world-renowned for its distinctive velvety blue color, and the gem is priced accordingly. While sapphire is still mined in Kashmir, it’s not the same quality as before. The highest quality stones are now found only in older jewelry offered at high-end resale venues such as auctions. However, even heat-treated Kashmir sapphire commands a high price, though some experts say price should be based on a stone’s beauty rather than merely on its source.

Magok Ruby Ring

Burmese Ruby

Burma (Myanmar) has been a source of fine ruby for a millennium. “Burmese ruby” traditionally refers to the vivid red corundum mined in the Mogok region. Rubies from this area still command a high price, and prices have climbed significantly because of the U.S. ban on importing gems from Myanmar.

Since the 1990s large deposits of lower-quality ruby have been mined in the Mong Hsu area of Burma. These rubies typically have cavities and fissures that are usually filled with glass during the heating process to make them look better. Here, again, the source country isn’t an absolute indicator of quality. A Burmese ruby should also be identified as Magok or Mong Hsu—and any treatments should be disclosed.


Ceylon (Sri Lanka is) the original source of the rare pinkish orange sapphire called padparadscha. Supplies of this gem (natural and untreated) have greatly diminished in recent years, resulting in dramatic price increases worldwide. The market has also had to deal with fraudulent padparadscha (see below).

A “Wild West” Industry

The competitive world of the gem industry often has a “Wild West” character to it. As new sources are discovered, dealers and workers rush to that mine. Sometimes the gem deposit is rich but is soon exhausted; sometimes there is a large quantity to be mined, but the quality is poor; sometimes the quality is decent, but only for very small gemstones.

Sapphire & Diamond Knot Bracelet

A rich deposit can become a vital part of the region’s economy, both for the local people and for the government. In areas of political unrest, insurgents may take control of this important financial resource. The players may change and the investment may shift focus as circumstances dictate.

A ruby story

A ruby deposit in Madagascar, in a remote rainforest location, created a boomtown almost overnight. An estimated 40,000 miners descended on the previously uninhabited locale. The gem material was plentiful, but most of the rough was fractured and considered unmarketable.

Four years later, large quantities of glass-filled ruby began entering the market. These rubies proved to be gems from that deposit, filled with lead glass to disguise their fractures. As time went on, the deposit yielded poorer and poorer material. Eventually, rubies from that site were more glass filler than actual corundum.

Fracture-filled rubies may look good to the naked eye—but glass is not ruby, and the value of the filled stone is immensely lower. Gems with fractures can easily break or chip. Also, when the filling breaks down, the “gem” can fall to pieces. Breakdown of a fracture-filling treatment is not damage for which the insurer is liable.

A sapphire story

Yellow Sapphire Ring

Centers of gem production and trade keep changing. In the 1930s, Thailand was producing about half the world’s sapphires; 60 years later, most of its known deposits were played out. Local industry then moved aggressively from gem production to gem treatment and distribution. Today Thailand is the world center for cutting, trading and treating corundum. About 70% of the world’s sapphires and 90% of its rubies pass through that country.

Given the importance of gem trade in Thailand, that country also does a brisk business in selling gems to tourists. Vacationers are easy prey for retailers hawking “bargain” gems and jewelry. The Thai sapphire scam has been going strong for years.

Be wary of insuring gems or jewelry bought anywhere on vacation. Such jewelry should be appraised as soon as possible by a reliable jeweler/appraiser who is not connected with the seller.

Story of a “look-alike”


Because of the high stakes in the world gem market, there is strong incentive to manipulate and imitate qualities that affect a gem’s value: its quality and rarity.

Padparadscha is a rare pink-orange corundum originally mined in Ceylon (Sri Lanka). In 2001 padparadscha-like sapphires, purportedly from East Africa, began appearing on the market. Dealers suspected a new gem treatment. The treatment was difficult to detect, and for a period of time all padparadscha became suspect. Prices fell quickly and some wholesalers lost tens of millions of dollars.

Ultimately, thousands of the treated stones were sold—without disclosure. They were worth only a fraction of the value they were given.

Dealers who are victimized may, knowingly or unknowingly, pass on their losses to less knowledgeable jewelers. The jewelers, in turn, overcharge consumers. Consumers who realize they’ve been burned may then try to “sell” the jewelry to the insurer through a bogus claim.

Losses from such grossly overpriced gems could be passed on to the insurer unless you secure an appraisal from a knowledgeable independent appraiser, preferably a graduate gemologist who is also a Certified Insurance Appraiser™.

These few examples from the world of ruby and sapphire also point out the importance of regular appraisal valuation updates. When fraud threatens the gem market, when an important mine runs dry, when new gem treatments are discovered, when environmental restrictions raise mining costs, or even just when fashions change, the value of a gem can rise or fall dramatically.


Pendant set with purple, yellow and orange sapphires,
along with diamonds. $12,000

For rubies and sapphires, it is essential that the appraisal be written by a gemologist experienced with colored gemstones and familiar with the current pricing, treatments and frauds. Most jewelers deal primarily with diamonds, and even a trained gemologist may have little experience with colored stones.

High-value Kashmir, Burma and Ceylon rubies and sapphires should be accompanied by a report from a reliable lab (such as AGL or Gübelin) verifying origin. (The insured can take the jewelry to his or her own jeweler, who will send it to a lab that has the equipment and expertise to determine gem origin.)

Synthetic Sapphire Bracelet

Synthetic sapphires are quite common. The appraisal should state that the gem is either natural or synthetic, since synthetic gems are worth considerably less than natural.

For sapphire, all treatments other than heating should be disclosed on the appraisal. (Heat treatment may also be listed, but sapphire is assumed to be heat-treated unless the appraisal specifies it has not been.)

If a gem is not treated, that should be specifically stated on the appraisal. A treated stone has only a fraction of the value of an untreated gem of similar appearance.

Check the appraisal for specific information on tone, saturation and hue. These are most important in determining the value of colored gemstones. It is useless to describe a ruby’s color as simply “red”, for example, since rubies are by definition red. In fact, gemologists recognize 4 distinct red hues for ruby.

For jewelry valued at $25,000 or more, get a second appraisal. Be sure the appraiser is experienced in dealing with colored gemstones.


In damage claims, have the jewelry examined by a jewelry professional working on your behalf to verify the jewelry’s quality and the truth of the appraisal. He might find, for example, that the stone was treated and the treatment broke down (damage for which the insurer is not liable).

Be sure the jeweler examining a damaged stone or pricing a replacement has experience in dealing with colored stones. He should also be a graduate gemologist and, ideally, also a Certified Insurance Appraiser™ (specifically trained in appraising jewelry for insurance).

For loss claims, carefully read the appraisal for mention of such terms as treatment, clarity enhancement, fracture filling, bulk diffusion, or beryllium diffused. These would suggest a lower-quality treated stone, perhaps with a significantly lower valuation than listed on the appraisal.

Do not assume that if the appraisal doesn't mention treatments, the gem must be untreated; most likely, if treatment (or lack of it) is not mentioned, other information is incomplete as well.

Synthetic sapphires are worth much less than natural. Check the appraisal for words such as synthetic, lab-grown, cultured or manufactured.  The term "Lindy" or "Linde" describes a star sapphire that is synthetic.

While there are fewer claims on colored stones than on diamonds, colored stones usually have much higher markups and generally have inflated valuations. A typical one-carat (treated) sapphire, for example, has a replacement cost of $200-$300.

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