May 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

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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Crown of Light ® — how special is it?

Vacationers often return home with new jewelry, purchases they regard as beautiful treasures that were also great bargains. If they've just been on a cruise, the jewelry will likely sport a Crown of Light® diamond, a "unique" diamond, a "patented" diamond, that "maximizes the diamond's highest potential."

How should the agent and insurer regard this diamond? Is it something special?

Branding the cut

Crown of Light is a brand name for a diamond cut with 90 facets. This 90-facet cut is promoted as an improvement over the popular round brilliant cut, with its 57 or 58 facets. The seller, Diamonds International®, says the Crown of Light cut results in "a spectacular diamond that disperses more light in more directions…with more fire than diamonds have ever achieved."

That is, of course, advertising hype. More facets do not equal more fire or scintillation.

The sparkle of a diamond comes from the geometry of the stone. Physics and optics have shown that a round brilliant diamond displays the most sparkle when cut to the proportions shown in this diagram, and this has been recognized by gemologists for some time.

For insurers, it's always worth looking closely at brand names. As we've discussed in Is that Brand Name a cut above the others?, a brand is not necessarily an indication of quality.

 

Patent?

Crown of Light's advertising makes much of it being a "patented diamond," available only from Diamonds International (DI). US patent regulations require that a patented article must be marked as patented and carry the patent number. Is each Crown of Light diamond so marked? We have not been able to examine a loose Crown of Light to check.

Requests to DI for the patent number have gotten no response. So we do not know for certain that it is patented, in what country the patent is registered, or if a patent is still in effect.

For insurers, this is a significant issue. If patented, a Crown of Light (COL) diamond would have to be replaced by one from DI—which is, of course, what the seller would like. But if there is no active patent, or if the stone is not marked with the patent number, a stone of like kind and quality could be cut elsewhere, probably for considerably less than the price DI would charge the insurer.

Note that a Trademark is not a Patent. The ® after the name Crown of Light looks very official, but it only means the phrase Crown of Light is a registered trademark, just as Diamonds International is a registered trademark. In fact, DI has trademarked more than a dozen "Crown" names.

A trademark only prohibits others from using that name, but doesn't prohibit others from making a similar product or supplying a similar service.

 

Appraisals & Valuation

It's always a good idea for insurers to know where the jewelry was purchased.  Jewelry bought on vacation should cause insurers to be extra alert about appraisals and valuations. Sellers in tourist areas know that vacationers often buy on impulse without understanding product quality or comparing prices.

Crown of Light is a case in point. These gems are sold exclusively by Diamonds International, which has at least 125 outlets primarily along the cruise line circuit. As discussed in last month's issue on Cruise Jewelry, sellers along these routes benefit from a steady flow of tourists heavily influenced by "shopping guides" who, for a commission, direct the travelers to certain retailers. Diamonds International becomes a name passengers recognize because they see it in every port and it is recommended by shopping guides.

Customers go away happy with their purchases but they may not remain so. On Internet sites, a number of Crown of Light buyers report inflated prices and appraisals. One consumer found her COL pendant purchased abroad for $3200 to be appraised at home for $950.  Another bought a COL ring valued by the seller at $5400 but appraised at home for $2800; her appraiser said the color and clarity were not as specified on the store's appraisal.


COL appraisal supplied by DI
(from auction site for previously owned jewelry)

One gemologist went so far as to describe the Crown of Light diamond as being cut like a miniature golf ball. Lots more facets, heavier carat weight, but less beauty than a well-cut diamond.

However, beauty is in the eye of the beholder. Any article under patent can be priced at whatever the seller decides, and if the buyer is willing to pay the stated price, a sale is made.

One customer was told by her appraiser that he didn't think the COL jewelry was worth the price paid because that same amount of money spent on a round brilliant cut would have bought a much higher-quality and more attractive ring. However, this appraiser said he could not value it lower because it was (presumably) a patented cut, available from only one source (DI).  

 

Trust us

Crown of Light, for its part, holds that because its diamonds are so unique it offers "training" for jewelry appraisers on how to appraise COL diamonds. One appraisal site in the COL fold says, "Unless they are a qualified COL appraiser they will not have the information or experience to grade the cut. GIA cut grading standards cannot be used for grading the COL diamond. This will significantly undervalue the diamond."

This is a "just trust us" position! It requires the customer to accept the seller's standards for quality, rather than the standards set by the internationally respected grading system of the Gemological Institute of America. It also requires the customer to accept the seller's estimation of value, since only COL-trained appraisers are qualified to recognize COL's value.

 

Conclusion

Insurers should seriously consider whether they are willing to insure a piece of jewelry that can be replaced only from the seller—a seller widely accused of inflated qualities and valuations.

FOR AGENTS & UNDERWRITERS

If you do decide to insure a Crown of Light diamond, or any jewelry purchased on vacation, be aware that you will probably have an inflated appraisal—inflated in both qualities and valuation. Sellers in tourist locations know that the buyer will leave the country and have little recourse if there is a problem.

Be sure to get a sales receipt, as the selling price will surely be lower than the "list price" from Diamonds International.

Brands and trademarks are not necessarily indications of quality but they can often provide useful information. If there are brand names or any other terms on an appraisal that you don't understand, it may be worthwhile to consult a jewelry insurance specialist working on your behalf.

 

FOR ADJUSTERS

Do not assume that a brand name automatically justifies a high price, since poorly cut diamonds often masquerade as "branded" diamonds. See Is that Brand Name a cut above the others?

If the appraisal is inadequate, brand name information may prove useful, since some companies and sellers are known for their quality. An insurer's expert working on your behalf can help supply more information about valuation.

Although Crown of Light claims to be patented, we have not been able to verify this. If you are faced with a COL claim, do everything possible to verify the patent before going to DI for a replacement.

 

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