November 2016

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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Scam season is always NOW

As the holidays approach, we caution jewelry buyers and insurers to be even more vigilant than usual, since enthusiasm for gift shopping can cause consumers to relax their attention to detail and short-circuit their comparison shopping.

Jewelry scams abound and, as we recount below, can occur all year long, in any local, and in all price ranges.

New York City's "Diamond District" is a stretch of 47th street in Manhattan where some 4,000 independent businesses are located, nearly all of them dealing in diamonds or jewelry.  The area is widely regarded as a discount district, where prices are lower because of the competition, or a locale where retailers sell at wholesale prices, though that's not the case.

Nevertheless, the sheer concentration of jewelry retailers attracts clientele, and this year a spate of scam reports burst out of this destination diamond-shopping area.

Ex. 1.  How did the diamond get  pink?

In May, Donna Curry, who owns almost 300 subway franchises, bought a pink diamond ring from a Diamond District retailer for $270,000. Upon returning home to Las Vegas, she had the ring appraised and was told that the stone was artificially colored—and therefore worth considerably less than a naturally colored diamond would be.

She returned the ring and asked for her money back, saying that she had not been told the gem was color-treated. The store refused to refund her money, so she is suing them for over $1 million to cover punitive damages and lawyer fees. "It was a total fraud," said her lawyer.  "She would have never bought the diamonds if she knew they were treated."

What we know:

Naturally colored pink diamonds are rare, and therefor expensive. But color enhancement, through HPHT or other methods, can turn lower quality white diamonds to pink, or to a number of other colors.

Ultimately, what's at issue is lack of disclosure. Disclosing the treatment would have meant losing the sale, since this buyer did not want a treated stone.

A stone of this price should have been accompanied by a GIA report stating its qualities and stating that it had been color-enhanced. Was there no diamond report? Did the buyer not ask for some documentation of quality? At this point we don't know.

Ex. 2  Were the docs doctored?

Eva Ho, a tourist visiting from Hong Kong, bought a 12.77ct ruby-and-diamond ring for $350,000. The purchase came with an AGL report stating the ruby was from Burma and was not enhanced. Shortly afterwards she purchased from the same retailer a 73.8-carat ruby ring for $350,000. This ring also came with an AGL report. Later she bought from that retailer an $188,000 ruby bracelet said to be from Van Cleef & Arpels.

Ho said she later discovered that the rubies were "valueless composites," with heat treatment and lead glass clarity enhancement. The lawsuit she filed in Manhattan Supreme Court charged that the store had misrepresented both the quality of the stones and their origin, and that the AGL reports she was given with her purchase were fraudulent. This last charge was backed up by an affidavit from AGL's president.

Altogether this customer spent $888,000. According to the suit, the total value of all the items is really less than $50,000.

What we know:

Composite rubies are poor quality, fractured stones that have been fracture-filled with lead glass—sometimes to the extent that the stone has more glass than gem material. A gemologist can easily distinguish a composite from solid ruby. Although they have been the subject of scams and scandals for some time – for example, the Macy's scandal – composites continue to be sold.

Composite ruby

A Burmese ruby, on the other hand, is a rare thing. A Burmese ruby of high quality would be extremely valuable; it would certainly require a report from  a reliable lab report, such as AGL.

AGL, American Gemological Laboratories, is a highly regarded authority on grading colored gems. Consumers and insurers should feel confident with an AGL report in hand. But—AGL's president declared under oath that AGL did not write this report.

Unfortunately, fraudulent lab reports are an insidious problem. Bogus reports may come from disreputable or non-existent labs, and those are easier for an attentive agent or consumer to identify. The more troublesome ones are forged reports that seem to come from well-respected labs—such as AGL or GIA—and that may be what's at issue here.

And here's another kink in this case. This is how the retailer responded to an inquiry from JCK, a jewelry industry journal:

The entire story is a fabrication, apparently orchestrated to make an insurance claim. The stone was valued at no more than $350,000.00. The woman sent emails stating that she wanted it insured for $1.5 million. As it was quite suspicious, I refused to comply. Now the customer falsely claims the stone was fake. I was not then, and am not now, willing to be drawn into a fraud. The truth will come out in court.

So who is doing the scam? The consumer, aiming at an insurance claim? The retailer, using bogus lab reports to justify inflated values? Or, did the diamond dealer who sold the gems to the retailer make false claims and supply fraudulent docs?   We wait to see if the truth "comes out in court."

Ex. 3  Undisclosed treatment & refund issues

In another incident, a couple bought a 5.38-carat diamond for $87,000. According to reports, the diamond turned out to be treated and the treatment was not disclosed.

What we know:

Non-disclosure is an all-too-common occurrence. It's a serious problem, because color and clarity treatments significantly lower the value of a gem.

Another common occurrence is what happens after discovering the problem, when a customer returns jewelry because it doesn't match the quality stated by the retailer.

For this couple, the store simply stalled, making promise after promise of a refund, and following up with delay after delay. In other cases the store has a "return" policy, but not for a cash refund. Instead, the store allows the customer to choose something else of equal value (or, more likely, equal inflated value). Or the retailer, as though doing the customer a favor, accepts the returned item in exchange only for store credit on an item of higher value.

The return policy may be mentioned in the fine print, but a buyer can easily overlook it in the thrill of the purchasing moment, or can interpret "return" to mean "return for a refund."  In any case, when merchandise is represented as being of higher quality than it actually is, that's a scam. In our opinion, when a store refuses to give refunds on misrepresented merchandise, that's another scam.

Ex. 4  Stone Swapping

The stories above made the news because they involve big bucks and the famous Diamond District.  But scams can happen anywhere.

Stone-swapping has recently been the subject of many complaints settling around the national chain Kay Jewelers.

This store sells an extended service plan: as long as the customer brings the jewelry in every six months for an inspection, certain services are free (ring sizing, prong replacement, chain soldering, clasp replacement, and the like). According to reports on internet sites, a number of customers who took their rings to Kay for inspection or repair have gotten their jewelry back with different stones.

Picture courtesy of Charles & Colvard, Ltd.

One customer reported that her ring just didn't look right. She had it examined by two other jewelers, both of whom determined that her ring was not diamond set in white gold, as described on her Certificate of Authenticity from Kay, but moissanite set in platinum. All moissanite available today is lab-made stone, similar in appearance to diamond but having about one-tenth the value of diamond.

When she returned the ring to Kay, they tested it and insisted that it tested as diamond. Kay also had the stone tested at Zales (which is owned by the same parent company as Kay), and that test also came out as diamond. The customer was told that the store's loss protection team would look into the issue.

BuzzFeed, an internet site, found several dissatisfied customers complaining on social media of similar incidents.  And after the woman above posted her story on Facebook, she said she was contacted by "hundreds" of people with comparable stories.

The women who claim their diamonds were swapped found the experience heartbreaking. One woman reported that the diamond in her engagement ring had been replaced with an obviously lower-quality diamond, as verified by an independent appraisal. After protesting to Kay for some time and getting nowhere, she finally just gave up—and no longer wears the ring. "It's not the diamond my husband got for me – it has no sentimental value. I don't want to have an engagement ring that brings bad memories."

What we know:

Swapping out a gem for a lower-quality stone is easily accomplished when jewelry is left for cleaning or repair. Reports of this scam make the news only from time to time, but it is probably an ongoing problem. We can't know for sure how often it happens because jewelry owners may not see the difference. Or, if they confront the store and the store stonewalls, they may feel they have little recourse.

The people who bought six-figure jewelry in the Diamond District can afford the time and expense of a lawsuit. For those who paid under $5,000, like the Kay customers above, a lawsuit may not be a viable option for recovering their losses.

Gemological Science International (GSI), a lab used by Kay for its "Certificates of Authenticity," grades diamonds in mass numbers for some of the large chain stores. This lab does not have a good reputation among gemologists and we do not recommend relying upon its reports or certificates. Since Kay is buying a large number of certs, possibly in bulk, it is possible that the certificate given to the customer did not match the customer's jewelry to begin with.

Note: Gems shown on this page are for illustration only; they are not the gems involved in the alleged frauds discussed.




High value or important jewelry often has a lab report, whether or not that is indicated on the appraisal, so the underwriter should request it. Depending on the insurance company's guidelines, you may want to make a lab report mandatory.

We recommend reports from these widely respected labs:

AGS Report Verifcation
GCAL Certificate Search

Beware of pre-done appraisals and certificates supplied by the seller. These are basically sales tools that often have exaggerated quality descriptions and inflated valuations.

The best appraisal includes the JISO 78/79 appraisal form, and is written by a qualified gemologist (GG, FGA+, or equivalent) who has additional insurance appraisal training. One course offering such additional training is the Certified Insurance Appraiser™ (CIA) course of the Jewelry Insurance Appraisal Institute.


Comb the appraisal and lab report for terms denoting treatments, as described above.

Always have damaged jewelry inspected by a trained gemologist—GG, FGA+, or equivalent, and preferably a CIA—to verify the quality of the gem matches what is  represented on the appraisal and lab report.



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