May 2004

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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Gem Scams Point to a Need for Change

How can insurers avoid being victimized by jewelry scams?

In our last issue we discussed a claim on a lost diamond stud earring. After paying out $48,000 as a total loss on the pair, the carrier found that the diamonds were low-quality fracture-filled stones. The insurer had overpaid by a whopping $39,286!

Overpayments on treated (fracture-filled) stones, though not always that huge, are commonplace. So are excessive payments for fake diamonds, or payouts based on bogus appraisals with grossly inflated valuations.

We’ve been reporting on these scams for years, and they are increasing. These are not the major scams that make headlines or TV news reports. These are the regular ones, that go unnoticed but steadily eat away at profits.

All these overpayments could have been avoided. It’s time for the insurance industry to take control of the process of insuring jewelry.

Change is always difficult — but often worthwhile. Adopting proper procedures makes the whole process of insuring jewelry easier, and it’s the most important step you can take to avoid costly overpayments.


Get a descriptive appraisal. A useful appraisal:

ACORD 78/79 Jewelry Appraisal, or ACORD 805 Detailed Sales Receipt, meet all these requirements, and they present data in a standardized, easy-to-read format. We urge insurers to recommend these appraisals to policyholders.

For jewelry valued at $25,000 or more, get a second appraisal. This helps verify the quality of the jewelry. Most buyers of expensive jewelry get a second appraisal anyway. The agent can take advantage of the opportunity to explain that payouts are based on the Actual Cash Value at time of loss, not on valuation, so it is to the insured’s advantage to have appraisals describing the qualities of the jewelry in detail. The agent can also point out that an appraisal supplied by the seller of the jewelry—or by an appraiser recommended by the seller—is not necessarily reliable. The insured should seek out an appraiser independent of the seller.

Ask for, and keep on file, sales receipts, diamond certificates, and any other documentation.

Jewelry should be inspected every year or two to check for loose stones and such, as a means of preventing damage or loss. Remind policyholders that such inspections are usually performed free of charge by the selling jeweler.

Do insurance-to-value calculations annually, since values of diamonds and precious metals fluctuate. New software makes this a simple task, an easy way to keep premiums appropriate.


Carefully examine ALL documents on file. For example:
Be sure the appraisal on file describes the item being claimed.
Compare appraisals with other documents to be sure they are describing the same item.
Check the appraisal valuation against the sales receipt: if the valuation is substantially higher, you can suspect an inflated appraisal.

Be alert for the terms “fracture filled,” clarity enhanced,” “laser drilled” and “Yehuda method” on appraisals, certificates or sales receipts. These phrases all denote treatments done to disguise a flaw in the gem.
These terms are important because: 1) certain treatments make a stone more vulnerable to damage, for which the insurer should not be held liable; and 2) stones with these treatments have a lower value than untreated gems of similar appearance.

Price a replacement based on descriptive information from the appraisal, not on valuation. If the jeweler knows your limit of liability, he may just aim for that.

Use the services of a jewelry expert, working on your behalf, for situations requiring jewelry expertise. By paying a nominal fee for such services, as you pay estimators in other fields, you eliminate any conflict of interest and save money in the long run. Your expert should be a Graduate Gemologist who is also a Certified Insurance AppraiserTM.

Always have damaged jewelry examined by your own jewelry expert before settling the claim. Examination may show that the jewelry can be repaired at minimal cost. Or the jeweler may recognize treatments or inherent vice that caused the damage, so the insurer would not be liable. In any case, the examining jeweler can give a description that you can use to check the accuracy of your documents on file.

If one of a pair of earrings is lost, or if one stone in a setting is lost, have your jewelry expert examine the remaining jewelry. It may well be possible to create a match for the earring, or to replace a stone, which would be much cheaper than paying for a total loss. Our files are full of instances of total payouts because the adjuster took the word of the policyholder (or the policyholder’s jeweler) that the jewelry was damaged beyond repair.

Rely on your own jewelry expert to estimate the cost of repair or replacement. Once your expert provides a baseline cost, show it to the insured and encourage him to use any jeweler of his choice. At a minimal cost to the insurer, this approach allows the adjuster to maintain control of the account.

For salvage, have your expert evaluate the jewelry and determine the minimum amount you should accept. Then get competitive bids.

Use a jewelry insurance expert to help with unusual problems. An expert is helpful with claims where the appraisal is inadequate or where circumstances are for some reason suspicious (a large discrepancy between purchase price and valuation, for example). In dealing with salvage, you may want the expert to shop around for your best price, or to suggest other solutions. It might be wise to consult an expert before paying any high claim, because he may catch something you’ve missed that would help avoid significant overpayment.

Get your SIU (Special Investigative Unit) involved sooner rather than later in any questionable cases. The best deterrent to fraud is fear of getting caught. This applies to both insured and jeweler. Fraudulent claims often miraculously disappear once word is out that they are being investigated.

Next Issue

How do you know whether you have a good appraisal? Here is a simple tool for scoring a jewelry appraisal for necessary and useful details.


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