October 2010

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

Moral Hazards on the rise - September

Hurricanes, fires, floods—and jewelry insurance - October

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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The Hazard of Fakes

Owners of a Los Angeles store recently pleaded guilty to selling knock-off designer jewelry. The press said they were selling “hazardous fakes” because the jewelry, manufactured abroad, contained 20 times the amount of lead considered acceptable in the U.S.

Even without the toxic lead, counterfeit jewelry is hazardous–to honest jewelers, who must compete in price with low-quality rip-offs; to consumers, who may think they're getting real designer jewelry at bargain prices; and to insurers, who can wind up paying outrageous settlements for fake merchandise.

Traffic in counterfeit goods, especially luxury goods like jewelry, is big business. And a fast-growing chunk of that business is on the internet.

Name Brands

For several years, Tiffany & Co. has been engaged in lawsuits against eBay over counterfeit Tiffany jewelry sold on the site. Tiffany accused eBay of profiting from trademark infringement, false advertising, and deceiving customers.

The last in a series of court decisions came down in September: Tiffany lost on all counts.

The court said that eBay did not sell counterfeit goods; only the fraudulent vendors did. It agreed with eBay's defense that it functions as a marketplace, like a flea market, not as a seller.

Tiffany alone has forced eBay to shut down more than 19,000 auctions and estimates that 95% of “Tiffany” jewelry advertised on eBay is counterfeit. Other designers may not have similar resources to police the net, as millions of new auction sites spring up every day.

Note that the Tiffany-eBay suit revolved around who should police the sites for fraud; neither side disputed that there was fraud going on.

What this means for consumers who buy any jewelry from online auctions sites is a major warning: Internet Buyers Beware! What it means for insurers is: be very cautious about insuring those goods.

Replicas

When it comes to name brand jewelry, “replica” is another word for “fake.” A number of websites openly sell replica jewelry. These sellers are not trying to fool the buyer–but beware that the buyer doesn't try to fool the insurer. Always check for evidence of authenticity.

 



“Certified” Diamonds

The word “certified” offers a sense of security and can put buyers off their guard, but it can cover a variety of frauds. As we've often warned, a diamond certificate is only as good as the lab that issues it.

Bogus certificates, produced by unreliable labs, are commonplace on the Internet as well as in brick-and-mortar stores. Retailers can buy diamond reports in bulk to accompany stones that were never examined by a gemologist. Such certificates also include a valuation, which a reliable lab's certificate will not do. Both the quality of the jewelry and its valuation are likely to be grossly exaggerated, for these certificates function as sales tools. They serve as evidence that the purchase is a bargain because the selling price is well below the jewelry's “appraised value.”

This ring, for example, which sold on the internet for $400, came with an “estimated replacement value” of 37 times the selling price!

Suppose an insurer accepted this USGL valuation of $14,883. The buyer would then be paying $200-$300 in annual premiums. Would anyone insure a $400 purchase at these premiums - unless they saw an opportunity? Such grossly exaggerated valuation is a moral hazard to insurers.

Forgeries. More sophisticated scams involve forgeries of certificates from reliable labs. These forgeries are done primarily to cheat the buyer, but of course they can ultimately cheat the insurer. GIA is such a recognized and respected name that its reports are often accepted without question, making them popular targets for forgery.

AGS, GCAL, and Gübelin, as well as GIA, produce reliable diamond reports. Be sure to verify the authenticity of any certificates using the links below.

FOR AGENTS & UNDERWRITERS

A good tip to pass on to your clients: When buying jewelry, always pay by credit card. Then immediately get an appraisal from an independent appraiser, who is a Graduate Gemologist and preferably a CIA™. Paying by cc is the buyer's best protection if the quality and valuation of the jewelry does not match the seller's claims.

Don't take brand names at face value. There is big money in faking big name jewelry.

Be wary of high-value jewelry from unauthorized dealers, especially second-hand sites.

A reliable gem-certifying lab is one that has built a reputation for accuracy and impartiality. Do not rely on certificates, lab reports, gem cards, gem i.d. cards, or other such documents from labs other than those listed below.

RELIABLE LABS

GIA (Gemological Institute of America) GIA Report Check
AGS Laboratories AGS Report Verification
GCAL (Gem Certification and Assurance Lab) GCAL Certificate Search
Gübelin Gem Lab (based in Switzerland) Gübelin Gem Lab

These are the ONLY labs we can recommend for reliable diamond certificates. For high-value stones, insist on a report from one of these reputable labs. And verify the authenticity of the report on the lab’s Web site, using the links.

FOR ADJUSTERS

Was the jewelry purchased on eBay (or anywhere on the internet)?
If so, be very suspicious of the stated quality and valuation. If it was a trademark brand, it is likely not to be genuine. Use every means to verify authenticity.

Is the valuation on a printed certificate/report/ID card supplied by the seller?
Disregard this valuation, as such papers function as sales tools. Try to determine value based on descriptive information and sale price.

If necessary, consult a jewelry insurance expert to help determine value. Valuations from eBay jewelry auctions are often grossly inflated.

Is it a brand name?
Look for evidence of authenticity. Some manufacturers sell only through authorized dealers. Merchandise bought online (or from other unauthorized sources) may be second-hand, or may be altered with cheaper parts, may have been sold openly as a replica, or may be a complete knockoff wearing an important logo.

Have all damaged jewelry examined in a gem lab to be sure the quality is as stated. For brand-name jewelry, be sure to have the piece examined by an authorized dealer of that brand to ensure all parts are authentic.

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