September 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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Jewelry Appraisal Fees

Jewelry insurers need good appraisals. Consumers sometimes balk at the cost. Here's a look at what the insured faces in pricing appraisals, along with some tips to help guide your clients.

You may even want to print out this issue and give a copy to clients who need appraisals.

 

First, a few things a jewelry owner should know before pricing an insurance appraisal:

 

Now, how to get a reliable appraisal at a fair price:

Free appraisal from the seller – No

A client may feel that, since she got an appraisal from the store when she bought the jewelry, there's no need to get another. Insurers know (or should know!) that appraisals supplied by the seller are notoriously inflated. Often the valuation far exceeds the sale price (see Appraisal Inflation). In addition, the quality description of the gem may be exaggerated, or information that would betray the jewelry's low quality is simply left off the appraisal.

Client needs an appraisal from a properly credentialed gemologist who is independent of the seller. (See below for credentials.)

Appraisal fees based on value—unethical

Fee based on jewelry's value - No

Some appraisers base their fees on the value of the jewelry being appraised. Most appraisal organizations agree that this practice is unethical. If the appraisal fee is a percentage of value, the appraiser may be tempted to inflate valuation.

A high valuation may make the jewelry owner feel good in the moment. But if insurance is based on an inflated valuation, the insured would wind up paying excessive premiums. Clients should avoid appraisers who charge by the value of the jewelry.

Fee based on size of stone - No

This approach may seem to make sense. However, the vast majority of jewelry insured has center stones of 1-3 carats, and it takes the same amount of time to appraise a 3 carat diamond as a 1 carat diamond.

It is only large stones, say a diamond of 4 carats or more, or special gems, like a Kashmir sapphire or Burma ruby, that require more time. Such stones are less commonly traded and the appraiser must research current price and availability to arrive at a valuation. But, by far, the vast majority of insurance appraisals are on diamond items and lower-cost colored gems.

Consumers with typical jewelry should avoid an appraiser who increments price with the size of the stone, as this pricing approach seems unethical.

Appraisal Day at a jewelry store - No

Appraisal Day at a jewelry store—probably pricey

Sometimes a jewelry chain store will advertise a day when customers can come in for jewelry appraisals. The hype may suggest that this is a bargain, as well as a convenience, for the customer. Such an event is, of course, a way to get jewelry owners into the store and entice them to buy more jewelry. But customers should be aware that they will probably be paying higher-than-usual appraisal fees.

For such events, appraisers typically must split their fees with the hosting store, and an appraiser may lose as much as 50% of the fee. In addition, the appraiser will incur travel and other expenses to set up a gem lab at the store. In order to cover costs, the appraisal fees must therefore be considerably increased.

The consumer is likely to get a better rate by dealing with the appraiser directly than by going to a chain store event.

Hourly rate - YES

An hourly rate is a fair way to approach pricing. A simple piece, such as a solitaire diamond ring, will cost less because the appraiser frequently appraises such jewelry and much of the research on value has already been done.

If the jewelry is complex, with many stones of different sizes or varieties, the appraisal will require more time and will cost more. Based on experience, the appraiser should be able to give an approximate appraisal price for the piece in advance.

Comparison shop for best hourly rates.

By comparing hourly rates, it is easy for consumers to shop for the best rate offered by a properly credentialed appraiser. (See below for discussion of credentials.)

Multiple appraisal discount

Many appraisers offer a discount if the client presents several pieces for appraisal at the same time. A client in need of multiple appraisals should certainly ask for such a discount.

Appraisal update

Many appraisers keep appraisal information in their files for five years or more. If the client needs an updated appraisal valuation within this time, the price is considerably lower than for a new appraisal. An updated appraisal should be issued only if the appraiser has cleaned and inspected the jewelry.

No update needed

Appraisal updates—some insurers don't require them

Not all insurers require appraisal updates. One prominent jewelry insurer has proprietary software to update valuations and premiums each year. In most cases, once a good appraisal has been submitted, the policyholder never needs to have it updated. This is a great saving to the insured over the years, especially when several pieces of jewelry are scheduled.

Even though no appraisal update is needed, the insurer recommends annual cleaning and inspection of the jewelry. Many jewelers and appraisers offer these services to their customers at no charge, suggesting an appraisal update where appropriate.

Appraiser Credentials: Independent — GG or FGA+ — CIA 

Ideally, a jewelry owner should have a detailed appraisal from an independent gemologist appraiser, one who is not affiliated with any jewelry retailer and can give an unbiased description and valuation of the jewelry.

Appraiser credentials:
GG or FGA
+
CIA
Independent of seller

The appraiser should also be a trained gemologist: either a GG (Graduate Gemologist of the Gemological Institute of America) or an FGA+ (Fellow of the Gemmological Association, the British equivalent of a GG).

It's an advantage to use an appraiser who has additional training in jewelry appraising for insurance. One course offering such additional training is the Certified Insurance Appraiser™ (CIA) course of the Jewelry Insurance Appraisal Institute.

Do you know such an appraiser to recommend to your clients?

It is a great value-added service to be able to recommend to the insured an appraiser with the proper credentials; an appraiser who supplies the detailed description useful to insurers; an appraiser who charges appropriate fees.

It's well worth the effort to do some research to locate an appraiser who services your area and meets these criteria. Establishing a business relationship could work to your mutual benefit. You could recommend the appraiser to your clients, and the appraiser could recommend you for jewelry (and other) insurance. Clients appreciate being guided to a reliable professional they can trust, and they'll also tell their friends about your services.

GIA Diamond Report: a one-time expense

In addition to an appraisal, all diamonds of substantial size (1 carat or more) should have a GIA diamond report. GIA charges by the size of the diamond, but for smaller stones in typical jewelry the price increments are low. And this is a one-time expenditure.

Having a GIA report is always a worthwhile investment because GIA's grading is regarded as the most accurate. If there is a discrepancy between GIA's description of the stone and the description given on an appraisal or on a report from any other lab, GIA's grades are regarded as the final word.

A GIA report actually adds value should the client decide to sell or trade the stone. Many jewelers and appraisers will assist in removing the stones and sending to GIA for the report.

Note, however, that a GIA report describes only the diamond and so it is not a substitute for a detailed appraisal describing the entire piece of jewelry and giving a valuation.

 

FOR AGENTS & UNDERWRITERS

Recommend that your clients get an appraisal from an independent appraiser as soon as possible after the purchase, to verify that the quality and value of the jewelry are as stated by the seller. The appraiser should be a trained gemologist (GG, FGA+, or equivalent), preferably one who has additional insurance appraisal training. One course offering such additional training is the Certified Insurance Appraiser™ (CIA) course of the Jewelry Insurance Appraisal Institute, Oakland, CA.

It's best to have an appraisal on JISO 78/79, which will include all relevant information about the jewelry and may gain the client a premium discount.

As a service to your clients, establish a mutually beneficial relationship with an appraiser in your locale who has the appropriate gemological training and writes good appraisals. You'll have someone to recommend who is reliable and fairly priced, saving clients the inconvenience of doing the research themselves. Clients will appreciate your extra work on their behalf. In addition, your business will increase because the appraiser in turn recommends you for jewelry (and other) insurance.

Follow this link to locate a Certified Insurance Appraiser in your area.

 

FOR ADJUSTERS

Be on guard against inflated valuations. Compare the appraised value with the sales slip, if available. If there is a large discrepancy between valuation and selling price, the selling price is a truer indication of value.

If a claim is made for damage, always have the damaged jewelry examined in a gem lab by a trained gemologist (GG, FGA+, or equivalent), preferably one who has additional insurance appraisal training. One course offering such additional training is the Certified Insurance Appraiser™ (CIA) course of the Jewelry Insurance Appraisal Institute, Oakland, CA.

 

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