Year in Review
This issue summarizes IM NEWS stories and advice of the past year.
Irradiated Gems
Even comparatively small amounts of radiation (such as the amount used by the Post Office to irradiate mail during the anthrax scare) can seriously affect some gems. In fact, irridiation is an inexpensive gem treatment often used to enhance the appearance of gems. Although they look more attractive, their value is not increased.
TIP: Irradiation is a treatment that should be disclosed on the appraisal. If you are insuring a gem of substantial value, be sure the appraisal states that it has not been treated.
See January IM NEWS.
Moissanite: A Diamond Simulant
Moissanite is fake diamond — almost as hard as diamond, even more brilliant, and costing about one tenth the price. Worst of all, it fools many professionals.
TIP: A trained gemologist can easily distinguish moissanite from real diamond under microscope magnification. Be sure a diamond appraisal is prepared by a Graduate Gemologist who is a Certified Insurance Appraiser™ in jewelry.
See February IM NEWS.
Fake Diamond Substitution
One jeweler was charged with several counts of theft for switching diamonds with moissanite, on rings that customers left with him for cleaning or resizing.
TIP: Recommend to policyholders that they have an appraisal done following any occasion when their jewelry has left their possession, such as for cleaning. This insures that no substitution has taken place.
See February IM NEWS.
Stellar Gem™ is CZ
A company called Stellar Gem™ is selling a new diamond simulant. It claims its product is visually indistinguishable from diamond, but this material is really cubic zirconia, very inexpensive fake diamond.
TIP: Stellar Gem™ stones have only a fraction of the value of diamonds.
See February IM NEWS.
GIA Diamond Report (or Certificate)
“Certified Diamonds” is advertising hype. Certificates from disreputable or non-existent labs are worthless testimonies. The Gemological Institute of America established gemstone grading systems that have been adopted internationally. Other organizations offering diamond certificates use their own grading systems, which are not understood outside their own labs.
TIP: For identifying diamonds, or for settling disputes over qualities of particular gems, a GIA Diamond Report is regarded as an impartial arbiter.
See March IM NEWS.
Diamond Certificate vs. Appraisal
Diamond certificates leave out information about cut. (Because most diamonds are poorly proportioned to increase carat weight, there are political pressures within the diamond industry to keep cut information off the certificates.) However, cut measurements account for half the stone’s value, so you’ll want to be sure to have an appraisal containing this information. An appraisal on ACORD 78/79 includes cut proportions.
TIP: Be sure the submitted diamond certificate is for the stone being insured. That is, check that the measurements, weight and proportions on the certificate match those on the appraisal.
See March IM NEWS.
AGS Diamond Certificate
The American Gem Society offers three documents describing diamonds. The most useful to insurers is the AGS Diamond Quality Report, which includes all information given in the GIA report. It also carries a Sarin Report — an illustration produced by a machine that measures the diamond and calculates its proportions.
TIP: Pay attention to the Sarin illustration on the AGS Diamond Certificate, as it contains measurements not listed in words on the report.
See April IM NEWS.
Colored Stone Certificates
Color is the most important determinant of value in colored stones, accounting for 50% of their value. Unfortunately, none of the colored stone certificates available describes gems in terms of hue, tone and saturation.
TIP: When insuring a colored stone of value, ask for an appraisal even if there is a colored stone certificate. Look for an appraiser who is a Graduate Gemologist and is knowledgeable about colored stones, and be sure the appraisal describes the stone in terms of hue, tone and saturation — as does ACORD 78/79.
See May IM NEWS.
Dealing with Damaged Jewelry
Having damaged jewelry examined by an independent appraiser in a gem lab almost always yields useful information. An exam may show that the stone was subjected to a treatment such as fracture filling, which makes it more vulnerable to breakage. Such treatments should be mentioned on the appraisal but often are not. The exam may also reveal that the value of the gem was greatly exaggerated.
TIP: For any item that could lead to substantial claim payment, have the piece examined by a professional gemologist in a gem lab. Ask for a complete description of the gem on an ACORD 18 form. Ask for an estimate of the cost of repair and for the salvage value of the damaged stone. Do not indicate that you will have the repair or replacement done through this jeweler.
See June IM NEWS.
The Self-Healing Emerald
Gemological language is quite precise. Color descriptions do not depend on the poetic skills or hype of the appraiser, but have specific, agreed-upon meanings. For instance, color tone might be described as “medium light,” saturation might be “very slightly grayish.” Precise descriptions are important since the price of a one-carat emerald, for example, can range from $40 to $10,000 depending on the quality.
TIP: An insurer, untrained in gemology, cannot recognize these fine distinctions in terminology. When you are insuring a colored stone of high value, recommend an ACORD 78/79 appraisal, prepared by a Graduate Gemologist with experience in colored gems.
See July IM NEWS.
Convenient Disappearance:
The Case of the Missing Opals
The insured bought the opals as an investment, and 10 years later they were lost. Investigations revealed that the opals were of low quality and overpriced, and all attempts to sell them over the years had been unsuccessful. One jeweler described them as “big and ugly.” Although the insurer couldn’t prove the opals were not indeed lost, investigators were able to arrive at a more realistic valuation, saving the insurer 38% on the settlement.
TIP: In the absence of complete descriptive information, a replacement jeweler will tend to sell you gems at the top of your limit of liability. To get an accurate and detailed description of jewelry being insured, ask for an appraisal on ACORD 78/79.
See August IM NEWS.
The Discount Mirage:
A Cautionary Tale for Insurers
A diamond ring was purchased for 10,895. A year and a half later a loss claim was filed and the adjuster went to the selling jeweler for replacement. Suddenly the retail price had increased to $12,800, but the jeweler was willing to sell it to the adjuster for $5,375. It looked like a great discount — until the adjuster put out a request for competitive bids. The insurer was able to get the ring from another jeweler for $3,550, well below the first “discount” offer.
TIP: Any jeweler can claim to be offering the insurer a discount. For all jewelry of substantial value, get competitive bids.
See September IM NEWS.
What Can You Learn from Salvage?
Many insurers simply replace a damaged piece, paying out the full limit of liability. By having an independent appraiser examine the damaged jewelry, or the remaining earring of a pair, you can learn whether the original appraisal description and valuation were accurate; whether the jewelry can be repaired for considerably less than a replacement; a stone’s value as salvage; whether the salvage stone can be recut and sold. Such information can save the carrier thousands of dollars.
TIP: A jeweler who knows you will either repair or replace through him will most likely recommend replacement, since it brings him greater profit (and he may not even know how to do repairs). It is in the insurer’s interest to have an independent inspection to assess damage and estimate repair costs. With salvage, get quotes from several jewelers before selling.
See October IM NEWS.
Gaining from Partial Loss
For cars, it’s assumed that damages will be repaired unless repair costs exceed the car’s current value. This is how jewelry should be handled. An expert working on behalf of the insurer can examine the jewelry, determine the cost of repair/replacement, give the salvage value, and make recommendations (such as recutting the stone and selling it). The expert supplies all this information to the adjuster in a standardized format, including photo, and the adjuster makes the decisions.
TIP: The insurer’s expert works with the insurer’s interests in mind. His aim is to increase the insurer’s profits, not the jeweler’s.
See November IM NEWS.
Next month:
Mysterious Orient: A Tale of Loss
Jade, death, theft, substitution, documents — the makings of a good mystery story. For some claims, the adjuster must be part sleuth.
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