Diamonds – Guaranteed to Appraise for….

I’m kind of under the weather, so this will be short… Apparently a lot of people get engaged around Christmas. I heard a lot of ads on the radio for diamonds lately.

What I’m curious about is the fact that if you buy diamonds at store X, they’re guaranteed to appraise for at least Y times what you paid. Now, if that were regularly true, and you could sell diamonds for what they’re appraised, there’s an unlimited arbitrage opportunity. Presumably, that’s not the case. So the appraisals are not really worth anything, except that some small part of the market is willing to pay appraised value.

My girlfriend thinks its just a scheme to rip off insurance companies. Anyone know what is going on and why?