In the case of a loss, how exactly does insurance work, particularly with respect to cut?

[Regular Guy]

While mindful of the recent report showing some relative variability in grading for color and clarity, it would seem that after filing any routine appraisal towards insuring your diamond, the expectation of replacement for the factors of weight, color and clarity would be pretty straightforward from the point of view of the insurer, owner, and appraiser. But what about cut? Perhaps when the largest player, GIA, soon re-does it's grading standard to include cut as a grading factor, this question will become moot. Yet even then, there is the question of the present and past certs and appraisals, that do not include this newer cut grade. So, meanwhile, if and when a loss should occur, and there is a need for the diamond to be replaced with the assistance of the insurer....

1) what actually happens
2) what is intended to happen
3) and what should happen

from the point of view of:

a) the insurer (I've seen I think recent posts from Jeweler's Mutual...are you or others out there)

- probably there is some variability between insurers; still, the issue/intention in this question is specifically replacement
- do you take control, and/or do you find the owner sometimes/frequently is not satisfied; how do you respond, and what concerns on the part of the owner do you find reasonable or unreasonable
- specifically, if the owner sought to match a cut grade, HCA score, and/or reference to Hearts & Arrows, that's documented, would this be an issue in any way?

b) the diamond owner

- obviously, if you've already been through this, please speak up
- do you feel the documentation you have/had will prepare you for this circumstance?
- what result will satisfy you, anyway (would you be looking for a match on a cut grade category aka Dave Atlas or AGS, or an HCA score)
- presumably if you've sought out and invested in an H&A stone, you will want to recoup the benefit of that as well; is this documented to your satisfaction?

c) the appraiser

- likewise, if you've been called upon to assist in making one whole -- with any perspective you feel useful to share on this, please consider sharing
- I have to think the industry is changing, and that it is a challenge to respond. For example, I note the quality recently reported here about the Chicago based PGS lab, and the approach and pride they take in documenting the location of inclusions seems to be where the art for this work has been....such that specific attention to the quality of and variation between diamonds in terms of cut is at least somewhat more recent in contrast....or perhaps it is just a focus of this particular Pricescope forum...continuous with many for decades or more.
- Regardless, and taking the example again where even PGS does clearly document crown and pavilion angles -- where they and GIA have not additionally set the diamond within a class of diamonds (i.e. documented a cut grade) -- what must be the expectation with respect to cut, for insurance replacement?
- where the owner has demonstrated a concern for replacing the diamond with one of equal (or greater quality) cut in the case of a loss, how have you seen this played out?

Thanks in advance for your thoughts,

 

[blitz]

"1) what actually happens
c) the appraiser
- likewise, if you've been called upon to assist in making one whole -- with any perspective you feel useful to share on this, please consider sharing"



Making the client whole after a loss: depends on the previous description/documentation. Even without a "cut grade" there should of been enough information to figure out what level of quality it was: a 6.20 mm/1.00 carat diamond with a 61% table and an extra large girdle -vs- 6.50 mm/ 1.00 carat diamond with a 53% table and a medium girdle, tells me that the second diamond most likely cost more then the first and came/comes from a different level of the market.

 

[WinkHPD]

I have never worked with an insurance company adjuster who did not want to make the insured properly whole.

If the information about cut is on the appraisal it will be a factor in the replacement and the premium required to get a properly cut stone WILL BE PAID!

In the terms of a branded stone such as an EightStar. I believe that this is Federal Law, but I am NOT an attorney. (Thank goodness!) My understanding is that if you take a branded stone such as an EightStar to an appraiser and he fails to appraise it for what it would be sold for by an EightStar dealer and it is lost or stolen or what ever and it needs to be replaced, that the insurance company will make the replacement, provided that the stone was at least documented in the appraisal as an EightStar, and then commence proceedings against the appraiser who is liable under his errors and omissions insurance.

If you have a branded stone, or a branded ring, make sure that it is properly appraised and documented. I could make most Scott Kay rings for a HECK of a lot less than Scott Kay charges. Doing so would be both a copy write infringement, AND would not constitute making you whole under the terms of your policy. Your ONLY protection therefor is to make sure any important information such as a brand be properly identified in the appraisal. If it is, you will be made whole. There is also a three time penalty for failing to make you whole, so it is in the insurance companies best interest to do it right, and as I said earlier, every single claim I have ever worked on was done with the complete cooperation of the adjusting agent.

Wink