January 2014

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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Who grades?

A diamond’s valuation depends on its 4Cs—cut, color, clarity and carat weight. The question is: Who grades the diamond? Who says the diamond is of this or that clarity grade, this or that color grade?

Whose word are you trusting?

And how important is this when it comes to settling a claim?

Many retailers supply certificates, or lab reports, with the jewelry they sell. The lab report states the specific qualities of the gem in the jewelry, and the retailer offers it in order to substantiate what he is telling the customer.

Ideally the certificate comes from a disinterested authority. Both words are important. An authority must be a recognized expert in examining and grading gemstones. To be disinterested, the authority must have no stake in the outcome of the exam.

In previous newsletters we’ve discussed the growing problem of unreliable labs, labs that have a reputation for pushing their grades up a notch or two. Exaggerated grades may impress the jewelry buyer, but these labs are not respected authorities.

There’s now a trend that challenges the concept of disinterested:  jewelry retailers that have their own certifying labs, turning out lab reports on the jewelry they sell.

This is not completely new. Tiffany has had its own lab for years, and it works to the company’s advantage because Tiffany is a name far more recognized by the average consumer than is GIA (Gemological Institute of America), a reputable lab not engaged in selling gems.

Forevermark, part of the De Beers group of companies, has had its own grading lab since 2008. Diamonds graded in the lab are inscribed Forevermark and sold as brand-name diamond, supported by a Forevermark lab report.

Recently Forevermark hooked up with AGS (American Gem Society) Labs. AGS has been a respected independent lab, providing reports to jewelry manufacturers and retailers, as well as to consumers. AGS now grades under the Forevermark label. Forevermark’s U.S. president Charles Stanley stated,  “So we have created a private label service within AGS. They are effectively another Forevermark lab.”

A company having its own lab verify the quality of a gem it sells is not quite like having an independent, disinterested opinion. It’s more like having the seller confirm his own opinion. It remains to be seen whether AGS, considered to be a reliable lab, will be able to maintain its independence when grading Forevermark diamonds.

Not only big name jewelry manufacturers have their own labs. Smaller retailers are also moving in that direction, supplying their own lab reports for the jewelry they sell.

Some jewelry store labs grade gems according to the GIA grading system. Others invent their own descriptions. One retailer gives his staff “Value Notes,” sort of talking points for describing the jewelry. Rather than educating customers on existing terminology and grading standards, this jeweler says:  "We use terms such as face-up whiter, or a 90-point spread as big as a carat." Rather than describing gems in terms of the recognized 4 Cs, the store is working on “changing the way our customers talk about diamonds.”

This approach is undermining the whole point of an objective standard in describing gems for the purpose of valuation.  Such casual language makes it impossible for customers to comparison shop. It would also be impossible for an adjuster to properly price a replacement for a “face-up whiter” diamond.

Jewelers give various reasons for issuing their own diamond reports. They say existing labs are undependable because a stone can receive different grades from different labs; they know their store’s own grades are true.

They argue that it’s the jeweler who is ultimately responsible for what he sells, so a report from another lab doesn’t much matter. They claim that customers don’t care about reports, or don’t care where the report comes from.

Without a doubt some grading labs are unreliable, exaggerating qualities to make gems sound more valuable. Such labs may supply retailers with reports that include valuations far beyond the selling price.  Among gemologists, it’s no secret which labs those are.

There are also bogus labs, labs with names that have no reputation, sometimes no address or website, labs whose names are never seen in print except on the masthead of a document that purports to verify the quality of a purchase.

Rather than exposing these dodgy or completely bogus labs, or simply avoiding the use of their reports, some jewelers have decided to produce their own reports. In the worst cases, instead of striving for the most accurate gem description, they merely produce the most salable description.

Adjuster’s predicament:

Because some labs have more “flexible” grading standards than others, the same diamond can receive different grades from different labs. For example, a stone given a color grade of H by one lab could be graded a notch or two higher by another lab.

This can lead to problems at claim time:

If the stone’s original lab report had inflated grading, and you replace the stone with a diamond of that quality as graded by a more accurate lab, the insured would actually be getting a better stone than she started off with (and the insurer would be paying a higher price for the better stone).

Or suppose the reverse happened. Suppose the stone’s original lab report gave accurate grades, but you replaced it with a diamond that came with an inflated report from a less scrupulous lab. In this case, the insured would be getting a poorer quality stone than she had. She might not realize it at the time. But later—perhaps the stone is damaged or is reappraised—an appraiser will accurately grade the stone, revealing it to be of lower quality than she originally had. The insured will hold the insurance company responsible. She won’t know or understand about the grading discrepancies among labs. She’ll blame the insurer for cheating her by supplying a cheap replacement. This may well cause her to remove all her business with the insurer.

Solution:

To escape this dilemma, have the replacement house supply a stone that has a grading report by the same lab that wrote the original diamond report. That is, if the claim you’re working has a GIA report, ask the replacement house for a GIA-certified stone with the qualities specified on the original GIA report; if the stone has an EGL report, ask for an EGL-certified stone with the qualities specified on the original EGL report, etc.

This protects the insurance company from ill will down the road, and ensures that the insured will get a stone of like kind and quality (LKQ).

FOR AGENTS & UNDERWRITERS

Don’t take at face value just any document that calls itself a diamond report. Consider the source. Any certificate you accept may be the basis for a future settlement, so you want to be sure the certificate is reliable.

We recommend the following reputable labs and suggest that you use these links to verify reports you receive.

GIA Report Check
AGS Report Verification
GCAL Certificate Search

Be wary of a diamond report if:

Even a good lab report is not a substitute for an appraisal. The lab report describes only the stone; an appraisal describes the jewelry as a whole, including metal type, karatage, weight, trademark, etc.

Preferably, the appraisal should be on JISO 78/79 form, written by a trained gemologist (GG, FGA+, or equivalent), with additional insurance appraisal training. One course offering such additional training is the Certified Insurance Appraiser™ (CIA) course of the Jewelry Insurance Appraisal Institute.

FOR ADJUSTERS

If you have a report from one of the reliable labs, hopefully it was authenticated and you can trust it.

If there is only a report from a lab not 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, and you have reason to suspect the truth of the appraisal or gem report, 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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