January 2001

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

Growing 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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Colored Diamonds

"We can take your light brown and brown diamonds and transform them into beautiful Blue Fancy color diamonds."

As you can imagine, when it comes to desirable gems, brown diamonds are at the bottom of the heap. A diamond supplier with a cache of low cost brown diamonds simply has extra baggage.

Technology to the rescue: In a lab, these low-priced stones can now be turned into attractive and desirable gems. The labs don't make those yellow and brown diamonds crystal clear; they make them deeply colored.

In general, the finest and most expensive diamonds are totally without color, like a drop of water. "Color" in diamonds usually means a yellowish or brownish cast; it is an unattractive attribute, signaling low quality and low value.

But intensely colored diamonds are a completely separate matter. Diamonds exist in rich blues, greens, reds, and even black. They are called fancy colored diamonds, to distinguish them from low-quality brown and yellow stones. These intensely colored diamonds are extremely rare in nature and very valuable.

Technicians can now treat low-quality diamonds to produce intense, highly colorful stones. "We can transform your cheap cape [yellowish] goods to rare green diamond shades," enticed one gem enhancement lab. The transformation is usually done by subjecting the stone to high temperature, high pressure, and/or radiation.

It is extremely difficult, even for professional gemologists, to distinguish the color-enhanced diamonds from naturally colored stones. This is the danger for consumers and insurers: if the treatment is not disclosed, a low-cost diamond is passed off as a rare and expensive one. As one lab promises, "you make much more profit because of what we call 'illusion effect'—no one is able to determine the exact value of your diamonds before the enhancement took place."

The Pegasus color treatment, developed by General Electric, entered the market a couple of years ago. Pegasus uses high temperature and high pressure, accelerating the natural processes that would take thousands of years in the earth. GE has made the decision to inscribe the girdle of their treated stones with "GE-POL" (Pegasus Overseas Limited), to avoid confusion with untreated diamonds. However, some stones have turned up with the laser inscription partially polished off, obviously a deliberate attempt by some gem supplier to pass off the color treated diamonds as naturals. Also, the girdle—the thin edge on the circumference of the stone—is usually concealed when the stone is mounted. In jewelry, treated diamonds could be passed off as untreated stones by an unknowing or unscrupulous retailer.

With assistance from GE, the GIA has been able to detect the Pegasus treatment. Detection requires sophisticated equipment not within the means of the average jeweler/appraiser, but gems can be sent to the GIA for a determination of Pegasus treatment.

Other enhancements that produce rich colors still escape detection. Rich greens produced through irradiation are particularly difficult; irradiation in the lab seems to have the same effect as irradiation in the earth. To gemologists using current methods and equipment, irradiated stones look the same whether naturally or artificially colored. In this case, scientists are turning to the Dresden Green diamond, a natural diamond of over 40 carats that has a historical record dating back to 1726, long before the advent of artificial irradiation. By comparing the Dresden Green, known to be natural, with other green diamonds known to be artificially irradiated, scientists hope to discover differences that will help them detect artificial irradiation.


In insuring diamonds, remember that diamonds of intense color are rare in nature. Those of exceptional quality are very expensive and considered collector's items. Intensely colored diamonds you encounter are likely to be artificially colored and not as high in value as natural fancies.

Every colored diamond of significant value you insure should have a GIA Diamond Certificate as well as an appraisal. If a color treatment is detectable, it will be disclosed on the diamond certificate. Be sure the Diamond Certificate is for the diamond being insured—that is, be sure the dimensions on the certificate match those on the appraisal. Also, be sure the Diamond Certificate is issued by the GIA (Gemological Institute of America), the recognized authority on diamond grading. Beware of scams in which impressive-looking certificates are issued by non-existent entities or by organizations without recognized authority and expertise in this area.


Artificially coloring diamonds is an inexpensive treatment, and a fair price for a color-treated stone is well below—even hundreds of times below—the price for a naturally colored diamond. With a claim on a fancy colored diamond of high value, if the appraisal does not specify that the gem was artificially colored, do a careful check before settling the claim. You'll want to be sure the stone was not an off-color (and low value) brown or yellow that was misrepresented as a fancy cognac or canary.

  1. Order a credit report on the jeweler/appraiser from a firm such as Dun & Bradstreet or Jewelers Board of Trade. This will tell how long the firm has been in business, the value of the business based on capitalization, and the firm's credit rating.
  2. Look at the jeweler's inventory. Ask him to compare loose stones on hand. Ask about the kind of stone in the claim, as though you are trying to educate yourself and appreciate the jeweler's help. Does the jeweler deal in this quality of merchandise? Does he have other fancy colored diamonds in stock? Is the store in a neighborhood where this quality of merchandise would attract buyers?
  3. Does the jeweler have formal gemological training? He should have at least a Graduate Gemologist degree and a gem lab.
  4. If you are suspicious, have a Graduate Gemologist check other non-lost items on the appraisal for accuracy.
  5. Check whether this jeweler or appraiser has been involved in other questionable claims. If it turns out that you cannot substantiate that the lost stone had a bogus valuation but you are still suspicious, keep the jeweler/appraiser's name on file. The next time the same name comes up, the underwriter can ask for another appraisal, and the insurer will not be victimized by the same unethical retailers.


From Lee Davis, CIA™:

A man brought in a blue diamond he had just bought, to have us confirm that it was a fancy. We examined it with a spectro-photometer and found it to be irradiated. Actually, with blue diamonds, irradiation is easy to recognize even without using a spectrophotometer. But with other colors, especially green diamonds, artificial irradiation is very difficult to detect. It is the jeweler's responsibility to disclose artificial coloring, and this jeweler had not done so, maybe because he lacked the gemological training to recognize the treatment. In this case, the customer was able to return the jewelry and get his money back.

Lee Davis
Seng Jewelers
453 Fourth Avenue
Louisville, KY 40202


Laser Drilling Must Be Disclosed

The FTC has ruled that jewelers and manufacturers must disclose all laser-drilled diamonds. The new ruling, effective April 10, 2001, requires disclosure of any treatment that "significantly affects the value of gemstones."

As discussed in the April 2001 IM News, some diamond dealers have argued that laser drilling is a manufacturing process, similar to using lasers to facet a stone. Laser drilling is always done to conceal a flaw, however, and many jewelers refuse to carry such stones.

Consumer advocates and members of the jewelry industry had pressed for the change in the FTC Guidelines. Initially advocates objected to the word "significantly," fearing that unscrupulous retailers could argue that a treatment was insignificant, and therefore need not be disclosed. However, the FTC Guides state that, in these cases, "the consumer's point of view is the relevant viewpoint." The Commission suggests that, in deciding whether a treatment should be disclosed, "retailers could ask themselves how a consumer would react if he discovers this treatment after he leaves the store (for example, when he takes the stone to an appraiser or attempts to sell the piece)."


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