December 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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Year In Review

The year-end holidays bring the usual seasonal influx of scheduled jewelry. With the increased business, agents and insurers should be especially aware of ways to make their work easier and give policyholders the best service possible. This issue briefly summarizes IM NEWS stories and advice from the past year, as a reminder of some of the issues and solutions.

Inflated Valuations

Many jewelry retailers artificially inflate prices so they can offer their customers "discounts." Then they write an appraisal with the inflated price as the valuation.

TIP: Be sure the appraisal includes detailed descriptive information. (Use ACORD 18, Jewelry Underwriting and Claim Evaluation, to check that you have the necessary details.) This descriptive information, rather than the valuation, is what you will give the replacement jeweler in the event of loss or in determining insurance to value (ITV).

See January IM NEWS.

Synthetic Gems

High quality diamonds and other popular stones are now synthesized in labs and sold by jewelers. These are optically and chemically identical to their natural counterparts but have a much lower value—sometimes as little as 1% that of the natural gem.

TIP: Many appraisals will simply not mention that a stone is synthetic—a potentially costly omission for the insurer if a synthetic stone is replaced with a natural gem. The appraiser who uses the ACORD 78/79 appraisal form guarantees that synthetic gems will be explicitly identified.

See February IM NEWS.

Jeweler/Appraiser Credentials

Literally anyone can hang out a shingle as a jeweler or appraiser. The retailer selling jewelry and writing appraisals may have no gemological training at all. In one study by JCRS, only 21% of insurance appraisals were prepared by graduate gemologists.

TIP: Recommend that policyholders obtain appraisals on the ACORD 78/79 form. This appraisal must be prepared by a Certified Insurance Appraiser™, who is a Graduate Gemologist and who has examined the jewelry with proper gem lab equipment to determine its value.

See March IM NEWS.

Fracture Filling of Gems

Surface-breaking cavities or internal fractures in gemstones are often filled with a foreign substance to improve the gem's appearance and fetch a higher price. The treatment is cheap and easy, using fillers that range from proprietary formulas to 3-in-1 oil. Fracture filling should always be disclosed on the appraisal.

TIP: The breakdown of a fracture filling treatment is not damage for which the insurer is liable. It is wise to suspect fracture filling if the damage is noticed just after the jewelry has been cleaned or the stone reset. In settling a claim on damaged stones, have the stones examined in an independent gem lab by a Certified Insurance Appraiser™.

See April IM NEWS.

Salvage Jewelry

Perhaps your company paid out money on a piece that was lost, only to have it turn up a few weeks later. Maybe a policyholder's jewelry was damaged, you ordered a replacement and took possession of the damaged piece. Even damaged jewelry can still have value.

TIP: The best way to deal with salvage is by competitive bids. Call the jewelers you deal with and ask if they want to bid on your salvage. Don't accept the first offer you hear—compare offers.

See May IM NEWS.

Gem Treatments/Enhancements

Some gem treatments are done to deliberately camouflage a gem's weakness. The Yehuda clarity treatment, for example, makes a diamond of lesser value appear (to the naked eye) to be of much higher quality. All such enhancements should be disclosed on the appraisal; if a claim is made on a lost gem, a treated stone has a significantly lower valuation than an untreated stone.

TIP: Information about treatments can come only after inspection in a gem lab by a trained professional, such as a Certified Insurance Appraiser™. A jeweler without the proper equipment or training may leave out treatments because he has not detected them. Recommend that policyholders get appraisals on the ACORD 78/79 form, where the trained gemologist appraiser warrants that gem treatments are explicitly stated, unless they are part of the normal handling of that gem.

See June IM NEWS.

What Jewelers Don't Tell

Most jewelry appraisals lack crucial information. They leave out the 4 Cs of diamonds—Color, Clarity, Cut and even something so basic as Carat weight. They leave out hue, tone and saturation of colored stones. They neglect to mention gem treatments, which lower the value of the stone compared to an untreated gem. These omissions occur because the appraiser is not a competent gemologist or is deliberately concealing information in order to inflate prices. Neglecting to include important information on the appraisal cheats both the consumer and the insurer.

TIP: If the appraisal you receive is obviously inadequate, insist on one that is more complete. Recommend that the policyholder get an appraisal on ACORD 78/79 by a Certified Insurance Appraiser™, a gemologist trained in appraising for insurance. Explain to the policyholder how a detailed appraisal is to her benefit: it is a record of what exactly she owns and, in the event of damage or loss, it assures that her replacement will match the quality of the original.

See July IM NEWS.

Laser Drilling of Diamonds

An inclusion in a gem reflects light differently and shows up as an imperfection. Sometimes gem dealers drill microscopic channels into an included stone, then use an acid to bleach the foreign material and make it less visible (to the unaided eye). Laser drilling is very evident under a microscope, but not all retailers have the lab equipment and training necessary to detect it. Also, not all retailers believe it is necessary to disclose this treatment.

TIP: Laser drilling is always done to conceal a flaw. A drilled stone is worth less than an undrilled gem with the same appearance, so this treatment should always be disclosed on the appraisal. A CIA™ using an ACORD 78/79 appraisal warrants that all such treatments are disclosed. A laser-drilled diamond can be replaced with a laser-drilled diamond. Similarly, if you are replacing an undrilled gem, require the jeweler to guarantee that the replacement has not been laser drilled.

See August IM NEWS.

A Diploma Is Not a Credential

The Gemological Institute of America now offers training for jewelers leading to an AJP diploma — Accredited Jewelry Professional. As stated in the GIA's own advertising, this course is designed to help sales associates improve their retail knowledge and sales presentation.

TIP: If you see AJP after an appraiser's name, remember that this diploma represents salesmanship. It does not imply gemological or appraisal training.

See August IM NEWS.

Jeweler Ethics

No professional jewelers' organization has established a code of ethics for its members. Unethical jewelers can cheat the buyer—and the insurer—by overstating valuation, leaving off crucial information from the appraisal, not disclosing gem treatments or flaws, and by writing appraisals without properly examining the stones. Most appraisals contain a statement declaring that the appraiser cannot be held responsible for the contents of the appraisal. This is, in effect, a license to say anything on the appraisal and not be held accountable.

TIP: An ACORD 78/79 appraisal guarantees that all necessary exams were performed in a gem lab, warrants that the valuation reflects the current replacement price at the jeweler's store, and identifies the insurer as first party to the appraisal. This means the insurer has direct recourse against the appraiser if the appraisal has errors or omissions.

See September IM NEWS.

Gem Scams

In one telemarketing scam, the gems arrived by mail and were sealed in plastic "to retain value." Due to the seal, an independent appraiser could not properly examine the gems to corroborate the stated valuation. In a recent headline case, a jeweler in West Palm Beach defrauded wealthy customers out of millions of dollars by selling them flawed and fake stones he claimed were from a sultan's estate. The con artist told his customers that showing the gems to another jeweler — as for an appraisal — would leak the news that the estate was being sold and prices would be driven up. In both situations, the buyers simply took the sellers' word that the gems were of high value and they were getting a bargain.

TIP: A detailed descriptive appraisal by a trained professional, such as a Certified Insurance Appraiser™, records the qualities from which the jewelry's valuation is derived. It assures the customer, and the insurer, that the jewelry is as the seller claimed.

See the September and October IM NEWS.

Fictitious Clarity Grading

Some gem suppliers are grading diamonds as "SI3"—a grade that does not exist in the grading system adopted by the Gemological Institute of America (GIA) and recognized internationally. Suppliers do this in order to pass off lower quality I1 (Imperfect) grade stones as "Slightly Imperfect."

TIP: If you are settling a claim based on an appraisal for a "SI3" diamond, use the grade I1 when describing it to a jeweler for replacement. The SI3 grade does not exist in the GIA system.

See November IM News.


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