Sat, 20 Oct 2007

What do you mean diamonds can chip?!

The
problem started back in 1812 when Friedrich Mos developed the Mohs
scale for gemstone hardness. He took a selection of stones and used
them to scratch each other. Harder stones would scratch softer ones
and he organized them into a ranking from 1 – 10 with diamond being the
hardest. Nothing will scratch a diamond except another diamond. This
is correct and diamond is in fact quite a bit harder than 2nd place
(sapphire) and it has lead to a long standing belief that diamonds are
indestructible.

Resistance to breaking and resistance to
scratching are two different things. Wood, for example, is generally
very soft and easy to scratch but pretty strong when it comes to
breakage. Pine is easy to scratch with your fingernail but buildings
made from it can last a lifetime and beyond. Glass is at the other
extreme. Under normal circumstances it doesn’t scratch all that easily
but it can be terribly fragile. Diamonds fall in between. Although
they are nearly impossible to scratch under normal wear, they can chip
with just the right impact.

Paragraphs like the above tend to
lead to a fair amount of stress for diamond customers who read them,
especially for those who are currently in the process of shopping for a
pricey diamond. What are the risks? As an appraiser I see chipped
diamonds fairly regularly (as do most appraisers) and this can lead to
us having a fair amount more experience at this than most people, but
it can also make us somewhat jaded about it. We see way more than our
share. Chipped diamonds come in through estates where it’s been worn
for a lifetime and now have a new owner, they come in from consumers
who have damaged a stone while wearing it or with a new purchase that
was damaged by the jeweler in setting. They come in from jewelers and
insurance companies who have a damaged stone either on behalf of one of
their clients or that they own and want to know what they can expect
for results for repairs. In almost every case it comes as a surprise
to the client that it’s possible to break a diamond.

The good
news is that, overall, the risk of breaking a diamond on any particular
day is pretty low. How low will depend on your lifestyle but it’s
instructive to watch the insurance companies who are in the business of
assessing risks like this. Almost all companies that offer jewelry
insurance offer an ‘all risk’ policy that includes coverage for
breakage as well as things like theft, fire as well as the more usual
perils that people expect from such a policy. They don’t publish how
the odds of the various risks break down in terms of claims but theft,
not breakage is surely at the top of the list. In exchange for
assuming all of these risks, they charge a premium of 1-3% per year and
they’re turning a pretty good profit at this deal. If we guess that
half of the claims are for breakage you can calculate that they figure
that their ‘average’ customer breaks their stone something on the order
of once very 200 years. It’s also worth noting that the companies
don’t charge a different premium depending on what you have. It’s the
same for princess cuts and rounds, for tension sets and bezels and for
engagement rings that are worn daily or specialty things that come out
of the box once a year. They know that certain items are more prone to
breakage than others but they’ve decided it’s not worth the time and
aggravation to charge different premiums based on this.

Someone is going to be that 1 out of 200 owner and it just might be you.

Now
what? First, as mentioned above, most insurance policies will cover
this and a good first step it to call up your insurer and discuss with
them your coverage as well as their claims procedures. It’s often
surprisingly painless. Most will have a jeweler or a list of several
in your area that they’ve contracted with in advance to assist with
this sort of claim. They can offer you alternatives ranging from a
full replacement or a cash settlement to a repair with a partial cash
payment for the loss in value. The details of this are the subject of
a different article and these details vary from company to company and
policy to policy but the claims adjuster or your agent should be able
to explain the procedure for your particular company and policy. If
you’ve got a policy in force when you discover that your diamond is
chipped, call the company and inquire about filing a claim. This is
part of what you’re paying them for.

Second, in some cases,
jewelers will offer warranty coverage that includes a guarantee against
chipping. It’s not that their stones break less, they are just
including this insurance component as part of their sales of their
sales presentation. As with the insurers, this will depend on the
policy of the particular jeweler and the ones who have generous
programs usually mention this proudly in their advertising as well as
in the paperwork they give you at the time of sale. If you buy a stone
with one of these ‘warranties’, make sure to read the fine print.
There are often restrictions about how often you must return to the
store for an inspection and it will often void your warranty if anyone
else works on the piece, even to size or simply polish it. With most
of these, the store will simply replace the damaged diamond with
another of comparable specs from their inventory. If you suspect that
your jeweler might have a warranty program in force, dig out your
paperwork then call them up to discuss your options.

But what
if you’re not insured, and you’re not covered under a warranty? First,
take it to a qualified grader to inspect the piece and assess the
situation: you may be at risk for further damage if you do nothing or
it may be something that you can simply live with. The difference can
be pretty subtle and an experienced eye is very helpful. Most chips are
along the outside edges of the stone and on the points of princess
cuts, pears and the like. A fair number of them can be repaired for a
relatively reasonable fee and with only a nominal loss in value. This
is a specialty area of jewelery: not all jewelers are experienced at it
but talk to them or your appraiser about how to go about getting it
repaired as well as what to expect in the way of results. Don’t forget
the repairs to the mounting and the re-appraisal of the finished
piece. These are both important parts of the repair. The jeweler may
also be able to modify the piece to conceal the damage in other parts
of the design. Sometimes this is as simple as rotating the stone in
the setting or it may involve adding a new design element. Don’t skip
the appraisal when you’re done. Failure to do so can cause the
insurance company to decline future claims because you have withheld
‘material facts’ from them and the newly repaired stone is a new item
for purposes of insurance. If you didn’t have insurance before, you
might consider starting a policy now.

Since we’ve discussed
getting appraisals a bit, let’s explore the value and process of them.
There’s far more to a good appraisal than just a value conclusion. The
appraisal you submit to the insurance company or that you keep in your
own files after you buy a new item is the benchmark of exactly what you
have at that point in time. This serves as evidence of an independent
witness who has attested to the condition as of a particular day,
presumably shortly after your received it. This protects not only you,
but the jeweler and the insurer as well. It protects you in that any
claim of damage to an insurer must come with the claim that the damage
is new since they agreed to the policy. If it was broken when you got
it, it’s reasonable that the insurance company should disallow the
claim and you should be talking to the jeweler about it. By
specifically documenting the condition you are eliminating this
loophole. It protects the jeweler in the same way. They don’t want
you coming back and accusing them of selling a damaged or defective
diamond months or even years in the future. By getting it appraised by
an independent appraiser immediately they have the opportunity to
address any concerns at once. It protects the insurer by defining
exactly what they must do for a replacement. Detailed and specific
appraisals lead to claims that can be processed quickly and to a
client’s 100% satisfaction. Happy clients after claims mean continuing
and repeat business for them.

Most people are naturally
concerned with what they can do to minimize their risks, even when
they’re insured or under warranty. To some extent, it helps to be just
plain lucky but chips generally happen when the edge of the stone is
knocked against something hard. Granite countertops, porcelain sinks
and other jewelry items with diamonds in them are the most common
culprits. When you’re wearing your jewelry be careful about these
surfaces and, when you’re not wearing a piece, put it in a soft bag or
compartment in your jewelry box to prevent knocking things against one
another. Be careful about putting it in your pocket or purse where it
can knock against other things. Have it checked periodically by a
professional. Most jewelers are happy to offer a free service to clean
and check your pieces whether or not you bought the item from them.
This can be a good source of repair business for them and while you’re
in the store they have the opportunity to sell you something else. It
can also serve as a low pressure way for you to get a feel for a store
that communicates well with you and that may deserve your business if
and when you do decide to buy something else. A bit of common sense
into how and where you wear your jewelery can reduce both your chances
of breakage and your chances of loss.

A particular area of
concern is damage that may be caused by the initial jeweler while
setting the piece or when the stone is moved from one piece to
another. This can be especially important for customers who buy a new
diamond from one source and have it set by another. Before you have a
diamond set or have a piece modified, ask the jeweler specifically for
their policy regarding breakage and have the diamond inspected for any
preexisting damage. Policies on this vary quite a lot from one to the
next. In general, the cheapest craftsmen will not be the ones with the
best coverage and may people find this to be an important criteria in
choosing a setter. As with the above, the risk here is relatively low
in most cases but it may be worth considering an insurance policy that
covers this if your jeweler says they won’t. Ask your insurance agent
about your choices for coverage and, if they don’t offer it, ask
jeweler or appraiser for a referral to a company that will.

by Neil Beaty
Professional Appraisals in Denver
http://www.americangemregistry.com/

American Gem Registry

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