I slammed my hand against a granite countertop while cooking. I looked down and saw a jagged chip on the girdle of my princess-cut diamond. I thought diamonds were invincible. I filed a claim. The insurer said, “We can recut the stone to remove the chip.” The problem? Recutting would turn my 1.0-carat diamond into a 0.8-carat diamond.
Key Takeaways
- Diamonds Do Chip: They are hard (scratch-resistant) but brittle (break on impact). Princess and Marquise cuts are most vulnerable.
- Recutting = Value Loss: If the insurer offers to “repair” (recut) the stone, you lose carat weight. Value drops exponentially with weight (a 0.9ct is worth much less than a 1.0ct).
- “Total Loss” Argument: You must argue that the chip renders the stone a “Total Loss” because it no longer matches the insured description (1.0 carat).
- Keeping the Chips: If they pay for a replacement stone, they keep the chipped one (salvage). You usually can’t keep both.
The “Why” (The Trap)
The trap is “Partial Loss vs. Total Loss.”
Insurers want to minimize the payout. Recutting costs $300 plus the loss of value. Replacing the stone costs $10,000.
They will push for recutting.
However, most specialized jewelry policies promise to replace with “Like Kind and Quality.” A 0.8ct stone is not like kind to a 1.0ct stone.
The Investigation (My Analysis of Payouts)
I checked how adjusters handle damaged diamonds.
Jewelers Mutual
- The Verdict: They typically replace the stone if the damage is significant. They understand that recutting changes the nature of the gem.
- The Salvage: They take the damaged stone.
BriteCo
- The Verdict: Strong coverage for damage. Their policies are designed to replace, not hack up the stone.
Homeowners Riders
- The Risk: A general claims adjuster might push for recutting because they don’t understand diamond pricing cliffs (the price jump from 0.99 to 1.00).
[IMAGE: Macro photo of a princess cut diamond with a visible chip on the corner]
Comparison Table
| Option | Result | Value Retained | Insurance Preference |
| Recut Stone | Smaller Diamond | Low (Weight loss) | High (Cheaper for them) |
| Replace Stone | New 1.0ct Diamond | High (Original value) | Low (Expensive) |
| Cash Settlement | Check for Replacement Cost | High | Varies by Carrier |
Step-by-Step Action Plan
- Don’t Wear It: A chipped stone is structurally compromised. It can shatter. Put it in a baggie.
- Get a Jeweler’s Statement: Have your jeweler write: “Recutting this stone would reduce weight below 1.0ct, significantly altering its value and classification. Recommendation: Replacement.”
- Refuse Recutting: Cite “Like Kind and Quality.” State that a lighter stone is not “Like Kind.”
- Check the “Pairs” Clause: If it’s a diamond stud earring and one chips, ensure your policy covers replacing the pair if they can’t match the remaining one perfectly.
FAQ
Does the warranty cover chips?
Rarely. Warranties cover “manufacturing defects.” A chip is “accidental damage.” You need insurance.
Can I keep the chipped diamond?
Only if you buy it back from the insurance company (Salvage Buyback).
Are chipped sapphires covered?
Yes, same rules apply.