Regardless of their value, diamonds, gold and other precious gemstones and metals are fun and exciting to own and wear . See “Diamonds: a Cut Above.” The only downside is the risk of misplacement, damage and theft—the latter the primary cause of financial loss.
Theft is the primary risk to diamond ownership, since damaging a diamond is difficult, though not impossible, because of its hard exterior. (See the Great Star of Africa, left)
Scratches and chips are indeed possible, and it is advisable to store jewelry in soft cloth in a jewelry box or safe deposit box. Owners also are counseled to make sure that a certified jeweler periodically checks jewelry to assure the prongs and clasps are secure. Wear and tear over time can loosen stones, giving rise to another risk of ownership—lost gems.
The FBI ranks jewelry theft as second only to automobile theft nationwide, with the wholesale and retail jewelry industry enduring more than $100 million a year in financial losses. Jewelry thieves know their diamonds, using pocket loupes, or small magnifying glasses, to inspect gems for the Four C’s. Once a stone is removed from a setting, it is difficult to document ownership. While laser inscribing the owner’s name or other identifying data offers a measure of security, savvy thieves simply re-cut a stolen diamond to remove the inscription.
The first place a burglar will look for valuable gemstones is the bedroom, especially jewelry left in plain sight. It is advisable to install a home safe specifically designed for jewelry, one that is secured into the infrastructure and cannot be removed. It also makes sense to have two security alarm systems, one to detect intruders at the perimeter of the home and another dedicated exclusively to the safe. The sound of the alarm during tampering should scare off most thieves. Many burglaries are committed by individuals permitted unfettered access to home environs—hence the need to conduct deep background criminal checks during staff recruitment. The installation of video monitors in the house is also advisable.
There are other ways to suffer loss, including improper diamond cleaning techniques. For example, cleaning with chlorine bleach can pit and discolor the mounting. Use a mild detergent or a sudsy ammonia bath for diamonds.
Another important piece of advice for owners is to obtain accurate, detailed jewelry appraisals to assure a fair and quick claims settlement.
Appraisal versus a diamond certificate
Bear in mind that an appraisal differs from a diamond certificate, a document generated by a gemological laboratory that describes a loose diamond—diamond certificates are not created for mounted or set stones. The key difference between a certificate and an appraisal is that a certificate does not offer any type of valuation for the jewelry item. For this reason, an appraisal is needed for insurance purposes.
Owning a beautiful diamond is one of life’s great pleasures. With related investment values rising, losing it invites both emotional anguish and financial stress.
Next Blog: Gem Values Hold Steady
Andrew McElwee is executive vice president of Chubb & Son and chief operating officer of Chubb Personal Insurance. He can be reached at [email protected].