An insured filed a claim for a lost diamond earring. The stud and its match were scheduled as 1.00 Carat each, "I" color and SI clarity, for $8,000. Her insurer asked Gemcor create a match. When we received the mate, we ran our standard test and found something unexpected: the diamond wasn't natural. It was lab-grown. In the years since its purchase, the replacement cost for lab-grown diamonds has plummeted. But the insured believed they were both natural, and wants a natural replacement.
Notable Timestamps
[ 00:58 ] - A client filed a claim for a lost diamond earring, but the mate, initially thought to be natural and scheduled for $8,000, was unexpectedly discovered to be lab-grown, with its replacement cost having plummeted.
[ 01:28 ] - Lab-grown diamonds are chemically and physically identical to natural diamonds, grown from a seed crystal in a lab, and only very high-quality equipment can differentiate them.
[ 02:08 ] - The main difference for lab-grown diamonds is value, as they are not rare. Natural diamonds take millions of years, while lab-grown are created in 30 days, making them significantly less expensive.
[ 06:12 ] - An insured's original appraisal correctly stated "lab grown," but underwriting dropped this crucial detail from the policy, as the industry lacked awareness of its importance years ago.
[ 10:10 ] - If an insurance company pays for a pair and later discovers the remaining earring is lab-grown, salvage recovery is minimal, as there's no market to resell them when new ones can be easily manufactured.
[ 11:27 ] - A lab-grown diamond pair purchased for $8,000 in 2001 (or $2,000 two years ago) can now be replaced by the original jeweler for $1,000 or less due to plummeting market prices.
[ 14:04 ] - The purpose of insurance is to make the insured whole by replacing the item with like kind and quality, not necessarily the original dollar amount, which is impactful when lab-grown prices change quickly.
[ 16:45 ] - Ali & Dana provide a recap of the points above.
Your PLRB Resources
CE Course: Jewelry Valuation & Adjustment - https://members.plrb.org/education/courses/jewelry-valuation-amp-adjustment
Coverage Question: Wedding Ring Diamond Replaced W/O Notifying Insurer: ACV for Original Ring? - https://www.plrb.org/documents/tree-root-damage-fortuitous-or-non-fortuitous-pcq-2022-01-21-dwf-b/
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