The diamond engagement ring
About 2 million engagement rings are sold in the U.S. each year. No doubt you've insured some of them.
A number of other gems are appearing on engagement rings these days, but diamond is still the most popular choice by far, and often it's just a solitaire on a simple band. This issue takes a close look at the iconic white diamond engagement ring that has held such prominence.
How traditional is it?
The practice of giving a small precious object to the beloved as a symbol of devotion, and also as a testament of the suitor's ability to provide for his wife, goes back hundreds of years, according to some historians. In earlier times, the gift wasn't necessarily jewelry or a gem, but diamond engagement rings may date from 15th century European royalty. A diamond ring as the ultimate engagement gift really took hold mid-20th century, as a result of De Beers' marketing campaign that a diamond is "forever."
According to one survey, 85% of American brides receive a diamond engagement ring. Diamond stands as a worthy symbol because it is the hardest mineral, resistant to scratches. It sparkles, it can be quite valuable, and (as a result of De Beers' market manipulation) it is regarded as rare. It makes a perfect choice for happily ever-aftering.
Diamond engagement rings are so familiar that insurers may cover them without much consideration. But it's worth reviewing a few factors that can seriously affect valuation.
LGD ring by Grown Brilliance
- 4 Cs
Quite simply, not all diamonds have high value. As we've covered many times, a diamond's value depends on its quality. The appraisal should describe, in specific gemological terms, the gem's Color, Clarity, Carat weight and Cut.
- LGD
Is the diamond mined or lab-grown? About a third of the diamond engagement rings purchased last year had lab-grown stones. Both mined and lab-grown are "real diamond," but lab-grown has a much lower valuation than mined diamond. - Vulnerable shapes
The traditional shape for engagement ring diamonds is round brilliant, though the current trend includes other shapes. Here it's worth noting that while diamonds are hard, meaning they're not easily scratched, they aren't especially tough. This means they can chip under impact, so some shapes of diamond are more vulnerable.
Marquise diamond with corners protected
For example, shapes like Princess or Marquise have corners that could chip unless the setting properly protects them.
Clarity and color treatments/enhancements
- Laser drilling
Visible inclusions, which make a diamond unattractive, can be made less apparent through laser drilling. A tiny hole is drilled to the inclusion, which is then bleached or vaporized. The treatment is permanent, though the drill hole remains. Sometimes the hole is filled with some other material to make it less visible.
- Fracture-filling
Surface-reaching fractures or holes from laser drilling are filled with a glass-like substance to make them less evident. This treatment is not considered permanent, since the non-gem filling may be damaged during jewelry repairs or if the diamond is subjected to cleaning with steam, acid or ultrasonics.
Diamond before and afterHPHT color treatment
See "Don't be Duped by Fracture-Filling" for a sad but true cautionary tale for insurers. Failure of a fracture-filling is not damage for which the insurer is liable.
- HPHT (High Pressure, High Temperature)
HPHT is a color treatment that can turn some unmarketable brownish diamonds to colorless diamonds. The treatment is permanent.
HPHT is also used to turn off-color diamonds to attractive colors like yellow, green, blue or orange. This use will be discussed in our future issue on colored stones
- Looks like diamond
Some young couples are lured by the appearance of diamond, but are willing to go with a more affordable stone with a similar look. A growing number of buyers are choosing moissanite, a lab-made stone that has even more sparkle than diamond but a much lower price.
Cubic zirconia is a mass-produced simulant that is far cheaper than diamond and will scratch more easily. A competent gemologist can easily recognize CZ. Moissanite is more difficult to distinguish from diamond.
- Sounds like diamond
Recently making the jewelry news was a UK-based company advertising "Skydiamonds" – diamond made from sky, so they said. The product was actually lab-made diamond, but apparently the maker didn't like the boring sound of that phrase. The company was dinged by the British government for misleading marketing. Their official directive was: If it's lab-made, you have to say so.
Our guidance here is: If you see any term on an appraisal that you don't understand, find out what it means.
We have also seen ads saying things like "2-carat ring!", followed by an attractively low price. The picture showed a ring with a huge sparkling gem—but nowhere on the ad did it actually say the word diamond. The stone may have been CZ or even glass, but the engagement ring photo put the concept of diamond in the viewer's mind. Again, misleading marketing.
FOR AGENTS & UNDERWRITERS
The appraisal should specify any treatments done to the diamond, or should state that it is untreated. Other things being equal, an enhanced diamond is worth far less than an untreated one.
Comb the appraisal for terms such as treatment, enhancement, fracture-filled, and HPHT. Treated diamonds have a lower valuation than untreated ones. Some treatments are not permanent, and the breakdown of a treatment is not damage for which the insurer is liable.
The submission docs should include appraisal, sales receipt, lab report, and color photos of the jewelry.
Compare the sales receipt to the appraised valuation. If there is a large discrepancy, the actual price paid is likely to be a reasonable indication of market value.
The most reliable appraisal is written by a qualified gemologist (GG, FGA+, or equivalent), preferably one who has additional insurance appraisal training.
Lab-made diamond has a much lower valuation that mined diamond of similar quality.
A reliable gem-grading lab can identify gem treatments, can distinguish lab-made diamond from mined diamond, and can recognize moissanite. You can use the links to verify reports you receive.
Gemological Institute of America GIA Report Check
American Gem Society Lab AGS Report Verification
Gem Certification and Assurance Lab Verify Your GCAL Certificate
FOR ADJUSTERS
Comb the appraisal for terms such as treatment, enhancement, fracture-filled, and HPHT. Treated diamonds have a lower valuation than untreated ones.
Changes due to inherent vice, such as a treatment that fails, are not damage for which the insurer is liable.
For all damage claims, regardless of value, always have the jewelry examined by an independent expert. This means a disinterested gem lab staffed by qualified gemologists. The lab should report to you not only existing damage but also characteristics of the stone, gem treatments, or any other conditions that would have made the gem vulnerable to that damage, and any evidence of wear and tear on the gem or jewelry.
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