February 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

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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Clarity Enhancements v. Inherent Vice



Photo courtesy of Arthur Groom of CEL

Clarity enhancements are multiplying – Is disclosure keeping up?

Gem enhancements have been around for a long time, but the better they get, the more likely treated stones will slip by as naturals. That's the problem.

Enhancement is a slippery word. Clarity enhancement sounds like a good thing, and in some ways it is—but in other ways it's not.

Clarity enhancement: the good

Appearance

Transparent gems appear at their best when they are clear of inclusions of non-gem material, clear of fractures or air pockets that distort the passage of light. For stones that have such inclusions, various means are used to make them less apparent.

Emerald, for example, is a gem material that is by nature highly included. Oiling is a routine practice that minimizes the visibility of surface fissures without affecting the gem's value or durability.

Fracture-filling is a much more drastic treatment, or enhancement. It masks fractures by filling them with a material that has a refractive index similar to that of the gem material. This allows light to pass through with minimal distortion. The treatment allows even highly defective emeralds, unattractive stones that would otherwise be discarded, to look good.



Emerald before & after fracture-filling treatment
Photo courtesy of CEL

 

The transformation in a stone's appearance can be dramatic. Only a trained gemologist observing the stone under high magnification would see the flaws.

Price

Fracture-filling allows the consumer to get a good-looking gem at a lower price. Because fracture-filling treatment is used on low-quality (and lower value) stones, an "enhanced" gem should be considerably lower in price than an untreated gem of similar appearance. (Note that we say should. See further discussion under Disclosure, below.)

Clarity enhancement: the not-so-good

Filling breakdown



Yellow fill material still attached to a piece of ruby rough
Photo by Fred Kahn and Sun Joo Chung of AGL

Literally hundreds of proprietary formulas have been used to fill fractures and fissures. Most clarity treatments are unstable: the filling material may become cloudy, dry up, or leak out. The jewelry owner may file a claim, believing the stone has been damaged, when actually the fill material has just deteriorated, leaving the stone's fractures exposed and visible. (This is not damage for which the insurer is liable). The clarity treatment may have to be repeated every few years to keep the gem looking good.

CEL (Clarity Enhancement Laboratory) developed a process for treating fractures in emerald and, more recently, in tourmaline as well. The company claims its enhancements for emerald and tourmaline – called Ex-Cel – are completely stable; they do not discolor, dry out, appear cloudy, or leak out.

Gem durability 

Clarity enhancement DOES NOT improve the stone's durability. It just hides the stone's defects.



Severely fractured emerald

Although fractures in a treated stone are not visible (to the unaided eye), they are still there. A fracture-filled gem is not solid gem material. A gem with fractures, even if they are filled, is more vulnerable to damage from impact or even from pressure used in setting the stone.

The extent of the fractures affects the stone's vulnerability. A highly fractured stone, like the emerald at right, would be more easily damaged that a stone with a few minor fissures.

The photo below shows a watermelon tourmaline before and after fracture filling treatment. The fact that the main fracture seems to run right through the center of the stone makes this treated stone quite vulnerable to damage.

 



Watermelon tourmaline, before & after enhancement
Photo courtesy of Arthur Groom of Clarity Enhancement Laboratory (CEL)

 

Importance of Disclosure!

Disclosure of all treatments must be made all down the selling chain—and this doesn't always happen. Not all jewelers recognize treatments or examine the merchandise they sell. Many jewelers and even gem suppliers do not realize that traditional enhancements are unstable. And disclosure documents can get "lost."

Without disclosure, whether it is intentional or out of ignorance, the consumer may pay more than the jewelry is worth, as a treated stone is worth less than an untreated stone of similar appearance. The jewelry's premiums may be higher than necessary, and an insurer's settlement could be excessive. Damage that resulted from a pre-existing fracture would be due to inherent vice, an excluded peril.

For the consumer, the word "enhanced" is not sufficient disclosure. The seller should explain what clarity enhancement is, why it is done, whether the treated stone requires special care, and why an enhanced gem is priced lower than an "unenhanced" gem of similar appearance.

In fact, true disclosure would require "before & after" pictures of the treated stone—which would most likely kill any chance of a retail sale. If the jewelry industry really supported full disclosure, these treatments would be described as "fracture-filling" rather than sugar-coated as "clarity enhancement."

All enhancements should be noted on the sales document.

An appraisal should specifically state any enhancements done to the gem, or it should explicitly state that the gem is untreated. A conscientious appraiser will also note how serious the enhancement is; a stone with a couple of small fractures filled is not as vulnerable as one that is riddled with fractures. (See Composite Rubies for a discussion of "gems" that are literally held together by non-gem material, and the lawsuit resulting from nondisclosure.)

CEL (Clarity Enhancement Laboratory) states that its Ex-Cel fillings for fissures in emerald and tourmaline are stable. A gemologist can tell whether a gem has been fracture-filled but usually cannot determine the material or process used.

If an emerald has been clarity enhanced, a GIA report will give some indication of the degree of treatment. GIA uses the "politically correct" grades F1, F2 and F3.  The GIA site says:

This is a judgment of the degree of clarity enhancement: minor (F1), moderate (F2), and significant (F3). "Minor" enhancement indicates the treatment has had only a slight effect on the face-up appearance, whereas "significant" indicates an obvious effect on the appearance.

FOR AGENTS & UNDERWRITERS

Be sure the appraisal states any treatments (enhancements) done to the gem, or states that the stone is untreated, as this can have a huge effect on value.

Your client may present an appraisal from the seller. For high-value gems, recommend an appraisal from an appraiser who is a GG or FGA, is independent of the seller, and preferably is also a Certified Insurance Appraiser™.

"Paraiba" tourmaline commands a high price, so some sellers are likely to extend the reach of the word Paraiba as far as possible. Before insuring this gem, you may want to review our issue on Paraiba tourmaline. The increasingly widespread use of fracture filling in tourmaline is an extra reason to be cautious.

Ultimately it is quality that gives tourmaline its value. Be sure the appraiser is a jeweler who regularly deals in these stones, is aware of the current controversy over nomenclature, can recognize gem enhancements, and is qualified to judge the gem's value.

High-value colored gems should be accompanied by a report from a reliable lab (such as AGL or Gübelin). The report will describe any treatments. It's best to have a report that also includes the gem's country of origin.

FOR ADJUSTERS

Comb the appraisal and other documents for references to treatments or enhancements. A color- or clarity-enhanced stone should be replaced by a similarly treated stone.

For damaged stones, remember that the breakdown of a fracture-fill material is not damage for which the insurer is liable.

When settling a claim on Paraiba tourmaline, be sure to consult a jeweler who regularly deals with tourmaline and can determine quality and valuation in the current market.

 

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