January 2016

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

Hurricanes, fires, floods—and jewelry insurance - October

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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Inflated appraisals—alive & well!
Shady lab reports—alive & well!
MORAL HAZARD—ALIVE & WELL!

Do you know when an inflated jewelry appraisal crosses your desk? It probably happens more frequently than you think. Here are a couple of recent examples from one insurer.

APPLICANT  A sought insurance on a lady's engagement ring.
The valuation on the accompanying lab report was $55,000. Not all insurers ask for the sales receipt, but this one does. The sale price of the ring was $28,000—half its purported value.

That huge discrepancy between purchase price and valuation caused the insurer to look at the docs more carefully, and then to look beyond the docs.

The Seller

The jewelry was purchased from a TV shopping network, which also broadcasts its auctions live on the Internet. TV and online jewelry sellers are notorious for overvaluing their merchandise, hyping it energetically to urge buyers to bid quickly, and providing insufficient information for even a savvy gemologist to be able to judge, from the onscreen presentation, what the jewelry is worth.

It turned out that several complaint sites online carry customer grievances about this particular shopping show. One woman wrote that she paid almost $5,000 for what was purported to be a 2-carat paraiba tourmaline ring, but what she got was a .85-carat blue zircon stone. Returning merchandise for a refund is a whole separate area of complaint.

The Lab

The $55,000 valuation was on a lab's "Valuation Report," which came with the purchase. It was signed by a Graduate Gemologist (GG) of the GIA, so that looked good. However, the lab was not one of the reliable ones (see below), but had an unfamiliar name.

The "Valuation Report" was dated the same day as the sale, a strong indication that the lab was in service to the retailer, rather than providing an unbiased gemological opinion. The purpose of the document was to provide an inflated valuation, so the customer would feel he had gotten a bargain.

The fact that the document came from a "lab" and was called a "report" lent an aura of authority. An appraiser can, of course, call his business a lab, and can choose to call his appraisal a report, but these terms also have a psychological effect on the consumer. He's more likely to trust the lab report and, in this case, to trust that inflated valuation.

Agents and insurers should be more wary. Insuring the ring for twice the price paid would be a serious MORAL HAZARD! Independent assessment put the true valuation of that ring at about what the customer had paid, and that is what it was insured for.

 

APPLICANT B applied for insurance on two rings.  One, purchased for $1000, had an appraised valuation of $3025; the other, purchased for $1280, had a valuation of $3,000. In both cases, the valuation document was supplied by the seller.

The Sellers

The rings were bought separately, on two different vacation trips, from two different sellers. Both purchases were "tourist jewelry."

Jewelry sellers on cruise ships, group excursions, and in popular tourist areas are notorious for inflating value (and quality) because they know their customers will be tourists. Vacationers are generally in a receptive mood, they tend to buy on impulse rather than comparison shop, and they will have no recourse if the quality turns out to be not what they were promised.

The Appraisals

One of the rings proved to be white gold, not rose gold as stated on the appraisal and by the seller. The appraisal was generally lacking in descriptive details. The appraiser had no credentials listed after his name.  And valuations for the rings were 2.5 to 3 times their selling price.

If the insurer had not been attentive enough to ask for the sales receipts but had merely insured the rings for their inflated valuations: MORAL HAZARD! 

 

FOR AGENTS & UNDERWRITERS

Make it a practice to always ask for a sales receipt. If there is a great difference between purchase price and valuation, the price paid is a better indication of the jewelry's value in the marketplace.

Inflated valuations are most likely for jewelry purchased:

Also be suspicious of

The best appraisals include the JISO 78/79 appraisal form, written by a trained gemologist (GG, FGA+, or equivalent) 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.

All high-value jewelry should also have a gem report from a reliable lab. Some labs are known to inflate gem qualities, and some supply bulk certificates to jewelry retailers without ever looking at the jewelry. Do not trust a report just because the business calls itself a lab.

These are the major trustworthy labs, and you can use these links to verify reports you receive.

GIA
AGL
Gübelin
AGS Report Verifcation
GCAL Certificate Search

 

FOR ADJUSTERS

Review all documents on file—appraisals, sales receipts, diamond reports. If some of these documents are lacking, ask the insured for them.

Comparing purchase price to the appraisal valuation is a useful way to avoid overpayment, as the price is a truer indication of market value than a possibly inflated valuation.

Be aware that appraisals and lab reports supplied by the seller are likely to have inflated valuations.

On a damage claim, ALWAYS have the jewelry examined in a gem lab that has appropriate equipment for the job and is operated by a trained gemologist (GG, FGA+ or equivalent), preferably one who has additional insurance appraisal training, such as a Certified Insurance Appraiser™.

 

 

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