The Case of the Fancy Diamond: Viewpoint

A brief history of Fancy diamonds

Diamonds are considered the most desirable gemstone available in the jewelry market today – they come in all shapes and sizes, and are traditionally given for engagements, anniversaries, and special occasions. When you think of a diamond, your mind goes to a flawless white-colored brilliant stone. The diamond color scale runs from D to Z – completely colorless to a pale yellow. Usually, the whiter the diamond, the higher the per-carat value. However, there are instances that a natural diamond is graded as a Fancy, with only one in 10,000 diamonds earning the grading classification.

Diamonds graded as Fancy can come in a multitude of colors, with some being much more common than others: Brown is the most common of the Fancies, yellow is considered notably rare, and most other colors, including blue and red, are considered the rarest. Within each Fancy grade, the saturation or strength of the color is given a secondary notation, such as Fancy Light, Fancy, Fancy Intense, Fancy Vivid, and Fancy Dark. As the strength and vividness of the color increases, so does the rarity and the value of the diamond.

The Claim

Our experts were recently called in to assist with a claim where a policyholder took her scheduled platinum 10-plus carat oval-cut Fancy Yellow diamond ring featuring trilliant (triangular brilliant) cut side diamonds to a jeweler while in Europe to be cleaned, at which time the jeweler discovered cracks in the center stone. The Insurance company paid out the scheduled amount of just over $306,000 for the ring. However, the Insured was convinced the ring was worth more than the scheduled policy and provided an appraisal for the ring from a European jeweler in excess of $1,000,000. Our team was tasked with determining the true value of the Fancy Yellow diamond ring for the insurance company to pay out the market appreciation coverage.

In the case of the Insured’s original 10 carat diamond, the stone was graded Fancy Yellow. Per our process, we researched diamonds currently available in the U.S. and world diamond market through the diamond marketplace Rapaport; the world’s leading and most reputable resource for the trading of diamonds. During our search, we were able to locate very few diamonds which met the color grade as well as the carat weight, cut, and overall quality of the original stone. We were able to determine, based on the current offerings in the diamond market, the original diamond ring to have a retail replacement cost of $267,415.

The Dispute

Understandably, the Insured was not pleased with our findings. Therefore, we reached out to the Insured’s original jeweler who sold the ring and provided the original appraisal, to seek an independent estimate of replacement. The jeweler had similar luck with locating available stones. After approximately a week of searching for suitable replacement oval-cut Fancy Yellow diamonds, we were provided with their estimate: $225,000.

To further support our findings welocated an independent reputable jeweler from the New York Diamond District to perform an additional valuation. In order to show complete impartiality, we provided only the original scheduled description with diamond grading report and the damage report of the original diamond ring without divulging: Our original findings, the original jeweler’s current estimate or original appraisal, or the Insured’s current replacement estimate provided by the Insured’s European jeweler. The independent jeweler scoured the open market as well as contacted diamond dealers in both the United States and Europe to locate an oval brilliant cut Fancy Yellow colored diamond meeting similar carat weight, color distribution, and quality to the original stone. With the comparable diamond located, the independent jeweler was able to determine the total retail replacement estimate for the entirety of the ring to be $202,000.00.

The Insured did not dispute the independent jeweler’s findings nor request for usto locate any additional opinions regarding the ring.