MARCH 2003

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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Can Valuations Be Trusted?

The limit of liability for jewelry is usually based on the valuation. Whose valuation are you trusting? How do bogus valuations play out for the insurer? What can you do about them?

In February, Jewelry Insurance Issues discussed inflated valuations. In this issue we’ll take a look at some real claims that show the cost to insurers of these exaggerated valuations.

An insurer recently contacted JCRS about a loss claimed on a diamond ring. In the carrier’s files was an “Appraisal Report” giving details about the center diamond’s qualities. The report estimated the replacement value of the main stone at $29,290. The carrier also supplied an “Identification Report” with details about the mounting, which included eight small diamonds. No valuation was assigned to the mounting.

The insurer’s limit of liability was $29,290.

JCRS put the replacement out for bid, using the descriptions on the documents submitted by the insurer. A bid from a well-respected, high-end retail jeweler came in offering to replace the diamond and mounting for a total of $16,900 — well below the insured value.

Two things about this claim stood out.

  1. The Appraisal Report and Identification Report both came from a lab known to give highly inflated valuations. As discussed in detail in the February issue, documents from labs such as this one are supplied by the seller and are basically sales tools, not reliable appraisals. They typically value the jewelry at twice its selling price, so the customer thinks he is getting a great bargain. In this case, the document stated that it was “for insurance purposes,” and the insurer took it at face value.
  2. The policy took effect on October 10 and the loss (mysterious disappearance) occurred on November 11. JCRS flagged this for the insurer’s Special Investigative Unit (SIU). There was also in the insurer’s files a receipt for a new mounting, dated November 1. Is it a stretch to wonder whether the jeweler who did the remounting told the owner that the ring’s real value was well below its insured value, and the policyholder was tempted to “lose” the ring and cash in on the insurance?

Another claim dealt with two items lost in a burglary — a gold bracelet set with 100 small sapphires and a lady’s gold ring with 17 diamonds. The bracelet was valued at $12,750, the ring at $8,150, for a total of $20,900.

JCRS noticed that the appraisal came from the seller, in this case a pawnshop. This raised a red flag about inflated values. Using the information from the appraisal, JCRS found that the bracelet could be replaced for $1,631 and the ring for $2,796.

The limit of liability for the two items was $20,900, but the insurer had to pay only $4,427, a savings of $16,473.

The root problem in both these claims is a grossly inflated valuation. Exaggerated jewelry valuations are becoming more frequent, as retailers more commonly supply appraisals or certificates with the merchandise they sell. The buyer is impressed that the valuation far exceeds his purchase price, and he feels like a savvy shopper. Neither buyer nor insurer may realize these documents are prepared by the seller, or by a lab on behalf of the seller, rather than by a disinterested appraiser.

On a loss claim, the policyholder expects to receive the full appraised value of the insured item and feels defrauded to get only a fraction of that sum. Indeed, some insurers pay the scheduled value, even though the policy does not require them to do so. They see a simple payment as easier and assume the financial loss will not be great.

But with retailers supplying appraisals, inflated valuations become more and more common. And with inflated valuations, moral hazard increases.

Isn’t it time for insurers to utilize ITV (insurance-to-value) software for jewelry?

Insurers can have ITV software on their websites, or agents can subscribe to an ITV service. Each jewelry item to be insured can be checked for valuation. If information needed for valuation is missing from the appraisal, the agent can tell the insured what is needed. This is a value-add for the agent. It assures the policyholder that he is not overpaying for insurance and it provides an accurate and complete description for replacement in the event of a loss.

An additional benefit is an increase of the policyholder’s confidence. The agent can warn clients about the prevalence of certificates with inflated valuations. If the ITV software determines that the jewelry is worth considerably less that the customer paid, the insured has an opportunity to return the merchandise.


Do not rely on diamond certificates that carry valuation, as these valuations are often inflated and the description may not be accurate. Ask to see the sales slip. Ask for a descriptive appraisal and valuation by a graduate gemologist who is a Certified Insurance Appraiser (CIA)™ and who has examined the stone.

Be attentive with jewelry from large retailers, especially when the purchase price is significantly below the certified valuation.

For large retailers, certificates and other appraisal documents are sales tools. You have no way of knowing whether a certificate supplied by a retailer represents the jewelry actually purchased. The same is true for online purchases. Ask for a descriptive appraisal on ACORD 78/79, prepared by a graduate gemologist who is a Certified Insurance Appraiser (CIA)™.

Even certificates from respected authorities such as GIA and AGS leave out information crucial to valuation, such as mounting data. For quality jewelry, always ask for a descriptive appraisal, preferably on ACORD 78/79.


If the insured item has only a certificate by a suspect lab, the valuation is probably inflated.

If the valuation on a certificate is much higher than the purchase price, the valuation is probably inflated.

In pricing a replacement, use descriptive information from the certificate or appraisal to get competitive bids. Don’t automatically turn to the seller for replacement.


Spotting a Bogus Appraisal or Certificate

How can you tell if a diamond certificate or appraisal is reliable? Is there any way to know whether a valuation is reasonable?


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