February 2015

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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Is that brand-name diamond a cut above the others?

In the cereal aisle or in the auto showroom you may recognize brand names and know what they mean. But how about when you see a brand-name diamond on a jewelry appraisal? Since diamond is actually made in the earth, what does brand mean here?

And: how much does the diamond's brand matter to the underwriter or adjuster?

We're conditioned to associate brand names with high quality—somebody must have put a lot of time and money into developing this new thing to make it really good. We'd do better to associate brand with high price—somebody has spent a lot of money on an advertising campaign, and that expenditure has to be recovered.



Lazare®

Branding diamonds is a fairly new phenomenon, dating from 1985 with the Lazare Kaplan diamond. The practice got a big boost during the wobbly economy, as suppliers and retailers looked for a way to stand out, to get a marketing edge. The trend has really taken off since then, and today there are well over a hundred brand names for diamonds. Even comparatively small jewelry retailers may come up with their own diamond brand.

Is it a cut above?

Brand names of diamonds are often names for the cut of the diamond. It may be a distinctive new shape or a minor modification of a traditional shape. Often the change is adding more facets, which the company's advertising says will "optimize the diamond's light performance," "improve light return," "create the most light dispersion possible," "enhance fire and brilliance," etc. It's worth noting that none of these claims has been verified by the industry's leading independent laboratories.

Any name will draw extra attention, but some names are more forceful than others. Hearts on Fire: the World's Most Perfectly Cut Diamond®, for example, is a grabber. Some branded cuts are patented and proprietary, others are not.

Names and mottos are all part of the sales strategy. Names and even taglines may be registered trademarks. One extreme example is a company that has trademarked the name chocolate diamond—a common phrase used in the jewelry industry for brown diamonds. It's a clever marketing move, because brown diamonds are actually extremely common and inexpensive. In fact, they've been considered poor quality, off-color diamonds. The trademarked name and a clever ad campaign aim to make them desirable. The company has also trademarked vanilla and strawberry diamonds, and a number of other phrases used in their advertising. It's all part of the name game.

Producers further count on luring consumers through presentation and packaging. Branded diamonds are often laser-inscribed with the brand name and a registration number, playing on the idea that the diamond is unique. Some retailers even include with each sale a lens with which to view these inscriptions. The package for a branded diamond usually includes a diamond report—sometimes from a well-known independent lab, sometimes with the brand name highlighted at the top.


Gabrielle

Important for insurers to know:

Branded does not mean patented.

A patented cut diamond, such as Tiffany's Lucida, should be named on the appraisal. If a patented cut stone is lost—and the patent is still in effect—the cut cannot be legally duplicated by others. The insurer would have to locate another patented stone in the secondary market or go to the patent holder for a replacement.

On the appraisal, a patented stone is appropriately valued at its selling price. The original price may have been high, but the consumer was willing to pay it. However, patented cuts do not necessarily hold their value just because they are name brands. The Lucida, despite its high breeding, fell in popularity and so it fell in market value. In a few years, it could be found at auctions and other secondary markets for a much lower price, so it's value on an appraisal should reflect that lowered value.



Ashoka

If the patent has expired, the insurer could buy or have cut a diamond of the same proportions from another source (at considerably lower cost). New technologies can analyze a stone to the finest details, measuring light return, showing inclusions, etc., as well as showing precise faceting geometry. Another stone could easily be cut to the same proportions as Lucida.

A "branded diamond," on the other hand, just means a manufacturer has given a name to a generic diamond of a specific cut, i.e., round brilliant Ideal cut.

It's a merchandising move, because a clever name attracts customers and because people tend to associate brand names with high quality. But it's just a name.

Hearts on Fire diamonds, for example, draw premium prices because the name currently has cachet. But a Hearts on Fire diamond doesn't have to be replaced by a Hearts on Fire diamond—it can be replaced by a comparable diamond with all the same characteristics as the stone in question. With jewelry, as with automobiles, the insurer's obligation is to replace with like kind and quality.

Case Study for Insurers

Suppose a client comes to you for insurance on an engagement ring he's just purchased. He has the seller's appraisal, sales receipt and a GIA report. The sales receipt says he paid $70,000, and it shows the name Cartier (or Tiffany, or some other Big Name). The seller's appraisal values it at $70,000.

Another client comes to you for coverage of an engagement ring purchased from Costco. The appraisal and GIA report show this ring has exactly the same qualities as the Cartier ring, except for the trademark. But the Costco sales receipt shows a price of $40,000, and comes with an IGI appraisal valuation for $70,000.

Is the Cartier ring really "worth" $30,000 more?
If it were lost, would you have to replace it with a ring from Cartier?


The generic mounting can be duplicated for perhaps $3,000. Cartier and Tiffany are not making these generic pieces in their own workshops. They job out for mounts or semi-mounts, probably to the same manufacturers that supply other independent guild stores, and then add the diamond(s).

Most of the ring's value comes from the diamond. This is not a "Cartier diamond" or a "Tiffany diamond." It is not a patented cut. It's a typical diamond. As we know from our example, this ring could be bought at competitive retail (Costco) for $40,000. If the insurer used a cost basis for replacement (raw material of the metal + fabrication cost + cost of stone + a reasonable markup for the merchant) the cost could be even less.

That lowest replacement cost is what the insurer's settlement should be. Insurers are legally obligated to put the insured in a pre-loss condition at the lowest cost to the insurer at time of loss. Anything more than that disregards the "public policy and indemnification" insurance legal cannon.

Those who argue that the prestige name adds to the value of the jewelry are often times mistaken. Once the purchase is made, value declines. One insurer who tracks jewelry's secondary markets found a substantially identical Cartier ring that sold at auction for $28,000.

What about that $30,000?

The $30,000 difference between the (Tiffany, Cartier, etc.) ring and the Costco ring turns out to be the price of the shopping experience—luxury store, blue box with a white bow. Once the purchase is made, the value attached to the shopping experience is lost. This sentimental value is neither tangible nor measurable, and it's not insurable.

 

FOR AGENTS & UNDERWRITERS

Pay attention to brand names and keep on file any brand literature than comes with the appraisal documents.

Some brands are just names. Others convey important information about quality. Still others, like Tiffany, Harry Winston, etc., add perceived value and may trade in the market at a premium, but remember that these companies sell generic items as well as original, unique ones.

Check out our December 2012 issue, which discusses brands for synthetic diamonds, diamond simulants, and treated diamonds, and the importance of recognizing these brand names.

Make no assumptions about the value of a brand. Be sure to get a detailed, descriptive appraisal on all scheduled jewelry.

It is important to have an appraisal from an appraiser who is aware of the current market. Even styles with prestige brand names can go out of fashion and lose value.

For high-value pieces, get two appraisals. At least one 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.

All diamonds of significant value should have a certificate from a reliable lab. Labs can afford the instruments that can precisely analyze cut proportions and map inclusions.  We recommend the following labs and suggest that you use these links to verify reports you receive.

GIA Report Check
AGS Report Verification
GCAL Certificate Search

FOR ADJUSTERS

Pay attention to brand names. In the absence of a solid, detailed appraisal, a brand name can provide important information about value. However, be aware that counterfeits abound in the jewelry world. A good place to look for assistance is in jewelry expert witnesses that insurance companies use.

Remember that a brand name does not mean a patented cut. Also, a patent can expire. Just as generic drugs are cheaper than the brands they mimic, a diamond cut that is not under patent can be reproduced much less expensively than going to the brand retailer.

Reputable makers of synthetic diamonds, treated diamonds and diamond-coated CZ also attach names to their products. Recognizing these names could save you tens of thousands of dollars on a claim. See our December 2012 issue.

Insurers routinely overpay on settlements. Before writing a big check to Tiffany, Cartier or another brand, it might be worth consulting a jewelry insurance expert to reach a fair settlement and avoid overpayment.

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