June 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

GIA Diamond Reports - July

Not just a pretty face - August

Moral Hazards on the rise - September

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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Smoking gun!

Lots of sellers advertise "certified diamonds." But it makes a big difference who did the "certifying." What if two labs report on the same stone—and the descriptions don't match? Which report do you believe?


IGI Report

 



GIA Report

 

One diamond, two certs

In a fortuitous occurrence, we recently were able to examine two diamond reports written by two different labs for the same stone. Insurers rarely have the opportunity to make such a side-by-side comparison, but this example illustrates a widespread problem.

In this case, the earlier report (Jan. 18, 2011) was written by GIA (Gemological Institute of America), a highly respected grading lab. In fact, it is GIA that established the color and clarity grading standards that are internationally recognized and used.

Several weeks later (March 30, 2011) the same stone was graded by the IGI (International Gemological Institute). We know it was the same stone because both reports mention the GIA report number that was engraved on the stone's girdle by GIA. Apparently the client was dissatisfied with the GIA grades and hoped for a better report from IGI, a lab known in the industry for its favorable grading and appraisal reports.

 

This is how two reports on the same stone differed:

 

IGI GIA
Clarity grade VS2 SI1
Cut grade Excellent Good
Girdle thickness Slightly thick to thick Very thick
Culet Medium None

 

What the grades mean

CLARITY GRADE

IGI's clarity grade is a step higher than GIA's. VS2 ("Very Slightly" included) means that inclusions are somewhat difficult to see under 10x magnification. SI1 ("Slightly Included") means inclusions are readily seen at 10x magnification.

CUT GRADE

IGI's grade is two steps higher than GIA's. Cut, referring to the proportions of the stone, determines the stone's geometry and play of light. A diamond's cut is a major determinant of its value.  IGI judges the stone's cut as Excellent, while GIA finds it merely Good.

GIRDLE THICKNESS

The girdle is where the setting holds the stone, and there is an optimal thickness for the girdle. IGI says this stone's girdle is Slightly Thick to Thick, while GIA describes it as Very Thick. An excessively thick girdle adds to the stone's carat weight—and therefore to its price—without improving the stone's appearance.

CULET

The culet is the bottom facet of the stone. IGI says this stone has a Medium culet, GIA says it has None. Lack of a culet facet makes the stone more vulnerable to damage there.

Recording cut geometry is not a matter of opinion but a precise science. In fact, sophisticated technology exists which can calculate a stone's exact proportions.

 

Bottom Line: Valuation

 

Based on the information given by the two labs, we consulted three sources. This is what we found:

Valuation for diamond as described by IGI:  $4,158
Valuation for diamond as described by GIA: $3,080 – 26% lower!

 

Pervasive problem

Inflated lab reports are increasingly prevalent. Many sellers give a lab report with each sale, to confirm the seller's description of the gem. Often the report comes from IGI or other less than scrupulous labs that engage in "flexible grading" which exaggerates the qualities of the jewelry. A lab report with inflated grading may make the customer feel good but it is actually lying to the buyer. Such documents also make it impossible for the buyer to truly comparison shop.

In the case described above, the stone dealer was apparently unhappy with the GIA grades and chose to submit to the retailer, and ultimately to the insurer, only the IGI report with its inflated grades. But since the IGI cert mentions the GIA report number that had been inscribed on the stone, the insurer was able to locate the GIA diamond report online. The GIA report gives a truer description of the stone.

GIA is regarded as the final authority on diamond grading. Whenever there is a conflict of opinion about the qualities of a diamond, insurers should rely on the GIA grades.

Insurers who unknowingly use inflated gem reports as the basis for coverage are likely to both over-insure and overpay on a settlement.

 

FOR AGENTS & UNDERWRITERS

Ask clients to submit all appraisals and gem reports, as they may contain different information. If an appraisal or gem report references any other documents, those documents should also be in your files.

The IGI report in this article mentioned the GIA report number inscribed on the diamond's girdle. This report number allowed the insurer to go online for a copy of the GIA report.

If you have a lab report number but do not have the report itself, or if you have a report that you want to verify, you can often get a copy online. Here are the links for verifying reports from the major labs:

GIA
AGL
Gübelin
AGS
GCAL
IGI   
EGL

 

FOR ADJUSTERS

Examine the documents for references to lab reports not in your files. Comparing data from all available reports and appraisals could help avoid overpaying a settlement.

GIA is the most highly regarded authority on diamond grading. Other labs may use more flexible grading. To avoid overpayment when replacing a diamond, match the stone to the report on file. For example:

If you are working with an IGI report, replace the stone with an IGI-certified diamond of the stated qualities.

If you are working with a GIA report, replace the stone with a GIA-certified diamond of the stated qualities.

You can verify reports from major gem-grading labs by following the links above.

 

 

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