January 2000

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


What's a Certified Appraiser? - January

Best Appraiser Credentials - February

Are the diamonds you’re insuring real? - March

Handwritten Appraisals - April


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

Inherent vice / wear-and-tear losses are rising - November

FRAUD UPDATE – lack of disclosure, false inscriptions & doctored docs - December


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


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


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


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


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


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


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


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


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


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


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


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

Grading the Color of Colored Diamonds

New GIA Cut Grade for Diamonds - December


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


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


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


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


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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Deceptive Pricing

The sign in the jewelry store window says "60% OFF!" Can such a bargain be true? What is a piece of jewelry worth?

The unfortunate truth is that many jewelry retailers artificially inflate prices so they can lure customers with spectacular discounts. This is especially true around the holidays, when consumers are very much in a spending mode.

In one highly publicized legal case, the state of North Carolina charged J.C. Penny Co. with deceptive advertising for grossly marking up prices prior to advertising sales. The state law requires that a bona fide original price be offered to the public "for a reasonably substantial period of time." The attorney general's office presented evidence that, for one jewelry item in question, only 3% of sales were at the so-called regular price, the remaining 97% being made at the discounted price.

The three-week trial in North Carolina Superior Court examined not only J.C. Penny's practices, but also practices of other multi-unit jewelry chains.

In a surprising--and quite disheartening--decision, the court ruled that J.C. Penny was not guilty because the deceptive practice was so widespread. The judge said the defendant was only trying to be competitive "in an industry where very few businesses make any effort to comply with the letter or the spirit of the law". He added that to single out one merchant for prosecution "in an industry that appears dominated by many violators" could be viewed as unfair.

Representatives of the jewelry industry say that the laws governing advertising are extremely vague. In the absence of specific legal definitions, it is a matter of interpretation what constitutes an honest price compared with an inflated price, or for what period of time a sale price may be in effect.

Meanwhile, as the judge in the above case asked, where are the consumer complaints? The case against J.C. Penny was brought by its competitors. The customers, who bought their jewelry at "60% off regular price," presumably walked away quite pleased with their bargain and never looked back. So who's the victim?

It might be you, the insurer. A retailer selling jewelry at an artificially inflated price may offer to write an insurance appraisal with a valuation based on the "regular selling price." To the consumer, this seems only fair. This practice significantly increases moral hazard and, if an insurance settlement is based on such an inflated price, the insurer is paying out too much.


How can you be sure that jewelry you're insuring has a fair valuation? The valuation should be part of an ACORD 78/79 appraisal. This appraisal includes a detailed description of the piece. Jewelry valuation is based on many qualities. With a diamond ring, for example, not just the number of carats is important, but also the gem's color, clarity and cut, as well as other attributes. If all the relevant details are given, as specified in the ACORD 78/79 appraisal, any trained jeweler/appraiser can verify the value of the jewelry.

You don't have to verify that the valuation is fair. Since an ACORD appraisal is prepared by a Certified Insurance Appraiser™, the stated valuation is guaranteed to reflect the current replacement cost at the appraiser's store. Unlike most appraisals, which contain a disclaimer saying that the appraiser is not responsible for the content of the appraisal, ACORD 78/79 carries a warrantee that the jewelry was inspected in a gem lab and that all qualities are as described.

ACORD 78/79 also assigns first party rights to the insurer as well as to the owner of the jewelry. This means if you think there is an error, you can question it, you can even examine the appraiser's records. If you have overpaid a claim because of a false valuation, you can go after the jeweler to be reimbursed.

(Future newsletters will go into more detail about how jewelry is valued and how even a small error or falsehood can dramatically affect valuation.)


Suppose you are settling a claim and you suspect the valuation is inflated (and, no, the jewelry doesn't have an ACORD appraisal signed by a CIA™). Try using ACORD 18, Jewelry Underwriting and Claim Evaluation. This form helps adjusters analyze jewelry appraisals for key descriptive content. You can easily see what details are needed for valuation and whether the appraisal you have is sufficient.

If important information is missing, ask the policyholder if there is a sales receipt (which may contain more information). Ask where the jewelry was purchased (retailers are known for the quality of their merchandise). Ask if she has a photograph of the jewelry or of herself wearing the jewelry. If there is no photo, and if the appraisal really lacks descriptive information, ask her to make a drawing (even a very rough drawing can be useful).

Finally, use the information you have to get competitive bids for a replacement. There's no need to disclose the customer's name, the policy, the original valuation or sales price, the original place of purchase, or the agent. Tell the jeweler only the information from the ACORD 18 form (do not give the jeweler the ACORD 18 form, or he will see what information is missing and may be tempted to embellish the qualities of the jewelry he offers you). Competitive bidding insures that you get the best price available.

CIA™ Corner

From Carl Saenger, CIA™:

The Jewelry Mart in Los Angeles is the sales location for as many as four dozen jewelry vendors. Customers will drive from two hours away because they think the sellers are offering gems and jewelry at wholesale prices. They're not. Jewelry Mart is regularly open to the public, and these are retail prices.

I've never seen a price at the Jewelry Mart that couldn't be beaten if the sellers told the truth about the jewelry they were selling. Usually they fudge the gem's color grade and clarity grade, presenting the stone as higher quality than it really is. The sellers get away with this by saying "Diamond grading is subjective." (Of course, they never err in the other direction.) The cut of the diamond, so crucial to its value, isn't even discussed.

These businesses thrive because, in this environment, customers think they are getting a bargain. They perceive the Jewelry Mart as a discount house. They never realize that, for an apparently low price, they have gotten lower quality than they were led to believe.

Carl Saenger
American Jewelry Company
3200 21st Street, Suite 500
CA 93301

The American Jewelry Company, in business since 1898, has a full manufacturing facility and complete custom design department.


Fake Jewelry and Fake Appraisals

This story centers in Florida, but it will no doubt impact insurers in other parts of the country, particularly in the Midwest and Northeast.

Florida jeweler Jack Hasson and his employee Clifford Sloan are currently on trial for fraud and money laundering. Hasson is accused of substituting imitation stones in jewelry that he sold and appraised for customers in elite Palm Beach County. Prosecutors estimate that he robbed customers of at least $80 million in a complex scam involving fake, flawed, filled and painted jewelry.

Many of Hasson's customers were vacationing in Florida or have seasonal residences there, but are insuring their jewelry elsewhere. Insurers should be aware that this fake jewelry could turn up anywhere. It would be worthwhile to check your files for appraisals written by these two jewelers.

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