Updated July 12, 2019: Pressure and heat, applied over millions of years, turns carbon into diamonds. These days, humans in labs can do the same.
Man-made diamonds and "natural" diamonds are increasingly hard to distinguish. Chemically, they are identical. But man-made diamonds typically cost 30% less than mined diamonds, according to Neil Beaty, an independent certified gemologist appraiser.
Though they may differ in cost, there's no difference when it comes to insuring a man-made vs. a natural diamond. A man-made diamond will cost less to insure because it has less value, but other than that, it's basically just like a cheaper diamond.
Real diamonds vs. man-made diamonds
The Federal Trade Commission has acknowledged that a diamond is a diamond, whether it grows in the earth or a lab. The FTC regularly publishes guidelines on how marketers can avoid using deceptive language. In the latest edition of its jewelry guide, the FTC removed the word "natural" from its definition of the word "diamond," since "unnatural" diamonds "have essentially the same optical, physical, and chemical properties as mined diamonds."
A diamond grown in a laboratory is still expensive, said David W. Hendry, CEO and lead underwriter for Jibna Personal Jewelry Insurance. It takes a lot of energy to create to heat and pressure necessary to grow a diamond.
It can also expensive to test whether a diamond was grown in the lab or the earth, Beaty said.
"It takes some expensive tools to tell the difference," he said. "There's relatively cheap tools that have 98% accuracy and in a lot of cases, 98% is enough."
How to insure a diamond
While a lab-grown diamond has less value, the insurance rate is the same as that of a mined diamond, Hendry said. You'll just need to buy more insurance for a more valuable mined diamond.
"As far as the rate per hundred dollars of insurance, it's exactly the same," he said.
As long as insurers know whether a diamond is mined or lab-grown, "from an insurance standpoint, it's not a big deal," Hendry said. The distinction is important because a standard policy calls for insurers to replace lost diamonds with something "substantially identical." That means insurers can't replace a mined diamond with a lab-grown diamond, Hendry said.
(Here's why you really should insure your engagement ring.)
Wherever your diamond was formed, insuring it starts with an appraisal. Though the FTC now says a diamond is a diamond, it still requires sellers to identify lab-grown diamonds as such. Many people skip the appraisal for synthetic diamonds, but it's still important, Beaty said.
"It's still an expensive item," he said. "It's still easy to lose."
Buying diamond insurance
You can insure jewelry either as an endorsement attached to homeowners or renters insurance or as a separate jewelry insurance policy. A standard homeowners or renters policy may only cover a diamond up to a limited amount, usually $1,000 or $1,500 and only under specific circumstances. You'll need an additional rider or endorsement to cover more.
To learn more, read our guide on how renters insurance covers jewelry.