May 2012

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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Changing colors and making gems:
Are we seeing “beautiful lies”?

Gems are usually chosen for their beauty, and then many undergo various enhancements to make them even more beautiful. But can an ugly-duckling stone become a gem? These days, the answer seems to be yes.

Gem enhancements have been around for a long, long time.  And they’ve been controversial at least as far back as the 1st century AD, when Pliny the Elder called gem treatments tantamount to fraud.

Since then—and especially in the last couple of decades—the number and variety of treatments have exploded, and so have the disputes and controversies about them. For gemologists, it may be a matter of truth and beauty; for gem suppliers and retailers, the issue is ethics; for insurers, it’s about valuation.

The purpose of enhancements is to improve the appearance of a gem. Heating and oiling are common treatments to enrich the color of a gem or to make its blemishes less apparent.

Today, many stones undergo treatments so extensive that they call into question the definition of “gem.” Advanced treatments can transform near-worthless material into salable merchandise. Gemologist Stuart Robertson, writing in a jewelry trade journal, calls such products “beautiful lies.” 

Enhancing Rubies & Sapphires

Natural corundum in a variety of colors

A particular victim of extensive treatments is corundum. Natural corundum comes in a vast spectrum of colors, ruby being the name for red corundum and sapphire the name given to all the many other colors of corundum. But fine quality corundum in deep, rich colors is increasingly difficult to find. That scarcity is driving up prices, even as consumer demand increases.

Heat treatment comes to the rescue. Heat can conceal fractures and improve the stone’s clarity, rendering marketable a large amount of rough that would otherwise have been unsalable. Heat can also enhance or change a stone’s color, converting off-purple sapphires to pure pink, or pale yellow to a golden yellow. One estimate has it that 94% of the sapphires on the market today have been heat-treated. Often these gems are sold without the treatments being disclosed.



Beryllium-diffused sapphire sold with disclosure by GemSelect.

Beryllium diffusion (also called lattice diffusion)  is a newer, more controversial, approach to color enhancement. In this treatment, a faceted stone is exposed to beryllium at high heat and the beryllium infuses the stone, enriching its color. Early efforts produced color only on the gem’s surface, and such surface diffusion was easily detected. If the stone were damaged or recut, its original color would show.

In the last decade, however, scientists discovered that if they heated the stone to a very high temperature for a long duration, the beryllium would penetrate the entire stone. Typically, the treatment reduces the blue component and consequently produces bright yellows, oranges or reds, depending on the stone’s original color. It can even create the much-admired phenomenon of asterism. This advanced beryllium diffusion treatment is permanent and said to be difficult to detect.

Some high-end jewelers will not carry beryllium-diffused gems, holding that the treatment creates a processed, synthetic color not suitable for quality jewelry. The original material was not gem quality, so the treatment in effect created a “gem” where one did not exist before.  
 
The issue of “gem-ness” is not just theoretical but economic, because when properly disclosed, beryllium-diffused corundum sells for a fraction of the price of its natural counterparts. But many of these treated stones enter the market without proper disclosure.

Non-Disclosure = Fraud

The treatment as such is not the issue. Gem treatments have made gemstone jewelry available to a greater number of people. Treatments create attractive stones, the retailer offers an array of products, and the consumer buys jewelry she likes.

The problem is disclosure. If treatments are not disclosed, the treated gems are competing in the marketplace with unenhanced, much more valuable, rubies and sapphires. If treated gems are priced on a par with untreated gems, the customer is cheated. And if an insurer replaces a treated stone with an untreated one, the insurer is cheated.

This kind of fraud is increasingly difficult to prevent. Treatments now routinely occur far up the selling chain, often before the stone is even cut. The gem supplier may not disclose the treatments, the dealer may not ask questions, the jewelry retailer may not inquire. Lack of disclosure means fraud could occur anywhere along the selling chain.

Consumers, at the end of the selling chain, may not understand the effect of treatments. Even if they are told that most gems are treated, they probably don’t understand how drastically treatments can alter a gem’s appearance. They probably don’t appreciate how huge can be the difference in value between treated and untreated gems.

Composite ruby


Glass filling breaks down
Photomicrograph by Christopher P. Smith of AGL

A large piece of the yellow-to-orange colored lead-glass used in the treatment is still attached to a piece of ruby rough.
Photo by Fred Kahn and Sun Joo Chung

The most egregious recent development that really deserves the term “beautiful lie” is the composite ruby. We’ve reported on lead-glass filled ruby in detail before. The subject bears mentioning again because colored gems are so popular and because advances in technology are always pushing the envelope of what can be sold as gems.

The composite ruby is severely fractured corundum whose fractures are filled with lead glass. Some are more glass than ruby, with the glass acting as a bonding agent.
The stone may pass at a distance, but under a microscope it appears as the conglomerate it is.

Such stones require very special care. Researchers have found that when a filled stone is heated to high temperature, the filler begins "sweating" and after a few moments flows out of the stone.

The filler also becomes damaged when exposed to solutions used for cleaning gems, and is even harmed by common household products such as bleach, ammonia and lemon juice. Once the filling breaks down, the stone's fractures are again visible; in extreme cases, the pieces of the stone may come apart.

A class-action suit was brought against Macy’s for selling such stones without disclosure. If a prominent retailer like Macy’s is willing to take this risk, you can be sure other retailers are as well.

 

FOR AGENTS & UNDERWRITERS

Keep on file all documentation for scheduled jewelry, including the sales receipt. Be sure to get a detailed appraisal, preferably on JISO 78/79, from an appraiser who is not the seller.

For rubies and other colored stones, it is essential that the appraisal be written by a gemologist experienced with colored gemstones and familiar with the current pricing, treatments and frauds. Most jewelers deal primarily with diamonds, and even a trained gemologist may have little experience with colored stones.

For ruby, all treatments other than heating should be disclosed on the appraisal. (Heat treatment may also be listed, but ruby is assumed to be heat-treated unless the appraisal specifies it has not been.)

If a gem is not treated, that should be specifically stated on the appraisal. A treated stone has only a fraction of the value of an untreated gem of similar appearance.

FOR ADJUSTERS

In damage claims, have the jewelry examined by an independent gemologist to verify the jewelry's quality and the truth of the appraisal. The exam might reveal, for example, that the stone was treated and the treatment broke down; this is damage for which the insurer is not liable.
 
Examine the appraisal for words such as composite, treated, fracture-filled, enhanced, synthetic, lab-grown, Be treated, Be heated, beryllium infused, lattice infusion, or other qualifying terms that suggest the stone is other than natural, untreated ruby. Treated stones are worth a fraction of the value of natural gems of similar appearance.

Just for comparison—one source gives these wholesale values:   

high-quality rubies    $5,000-$12,000 /carat
rubies of lesser clarity and color $350 /carat
ruby composites  $1-$50 /carat

 

Do not assume that if the appraisal doesn't mention treatments, the gem must be untreated; most likely, if treatment (or lack of it) is not mentioned, other information is incomplete as well.

If there are any terms on the appraisal you don't understand, consider consulting a jewelry insurance professional, to avoid serious overpayment.

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