On Diamond Certificates, Appraisals and Insurance

Next to buying a home or car, buying a major diamond jewelry item like an engagement ring is likely to be one of biggest purchases you'll ever make. That's why it's so important to be able to verify the characteristics, quality and value of your diamond in case it's ever damaged, lost or stolen.

To help ensure that you don't become just another "statistic," here is a brief practical guide to diamond certificates, appraisals and insurance and what they can do for you.

Certificate - Also known as a diamond grading report, this is a professional evaluation of a diamond's quality and characteristics. A certificate, or "cert" as it is often called in the trade, provides proof of a diamond's identity. The best, most accurate certs are performed by independent accredited gem labs - such as the Gemological Institute of America and the American Gem Society - that were not involved in the purchase or sale of the diamond.

While a cert doesn't state a monetary value of your diamond, it gives you a tangible document that attests to the quality and authenticity of your stone. It can help you "comparison shop" to determine which stone is a better value. It is also used by appraisers to help gauge a stone's replacement value for insurance purposes. However, if you want to insure a diamond, you still need to obtain a separate appraisal.

Some of the things you'll find in a standard grading report include: a plotted diagram of the stone, listing all of its significant characteristics, such as its shape, carat weight, color, clarity, exact measurements and proportions, imperfections, and the quality of the stone's polish and symmetry. The report may also contain comments about the presence or absence of fluorescence in the diamond and the quality of its cut.

Appraisal - This is a document that states the approximate insurance, replacement or estate value of an item. It is required by insurers. The value of a piece of jewelry is calculated by appraisers using a number of different factors, which typically include: current retail prices in that regional market; cut, color, clarity and carat weight; the weight of the precious metal; the origin of the materials used; and the craftsmanship of the piece. The more detailed and accurate an appraisal report is, the less likely it will be challenged by insurance companies, the IRS, divorce lawyers or competing appraisers. Many appraisers also plot gemstones and use photos and/or diagrams as additional documentation.

Insurance - Many retail jewelers offer insurance options to customers through a partnership with an insurance firm. Policies can vary greatly and should be researched and compared against one another. A second option for you would be to add the coverage to your existing homeowner's policy. Check with your agent about what is covered and what isn't. A third option would be to contact an outside firm that specializes in separate jewelry insurance policies, such as Jewelers Mutual.