If you watch the news, you know unexpected tragedies like burglaries, fires and natural disasters happen every day. But what may be even more unexpected to some victims is finding out most homeowners insurance does not adequately cover their cherished collections.
Let’s take a closer look at the facts and identify the steps you need to take to keep yourself from becoming a victim twice.
Why homeowners insurance is not nearly enough
Designed to protect personal property, homeowners insurance is probably insufficient to safeguard your collection. Homeowners insurance usually limits three things:
1. Personal property coverage to a percentage of the residence value;
2. Personal property while it is away from your residence; and
3. The amount payable for theft of valuable items like silver, crystal, guns, and stamps.
Even if your collection is covered, you may not be able to make a claim unless you have your collection listed on a schedule. Claims settlement may be based on actual cash value rather than the replacement value of the collectible. Finally, losses caused by flood, hurricane and earthquake may not be covered under the terms of your homeowner’s policy.
If you are utilizing your homeowner’s policy to cover your collectibles, be sure to call your agent or insurance representative to discuss the coverage available under your policy. Put your understanding of the coverage in writing and request a written acknowledgement and comments.
What to look for in a policy
The best way to protect yourself is with a separate policy specifically designed to insure collectibles. Seven important areas to consider are:
1. Blanket coverage. Broader and more comprehensive than named peril insurance, blanket coverage provides for most causes of loss unless specifically excluded.
2. Thorough coverage. Some carriers break coverage for crime down into three types: burglary, theft and robbery. Be sure your policy provides coverage for all three types of crime. If you live in an area prone to natural disasters like earthquake, hurricanes or foods, consider a policy that covers these types of losses. In general, look for a policy that provides coverage for natural catastrophes when available.
3. Travel coverage. Sooner or later you will need to travel with your collectibles. Your collectible policy should allow you to travel with a portion of your collection.
4. Shipping and mailing coverage. Today more and more collectibles are being purchased on the Internet. Make sure your coverage is worldwide and allows use of shippers such as FedEx and UPS and the U.S. Postal Service registered or express mail.
5. Automatic increases. Some policies provide for additions to your collection or increases in value by offering an automatic coverage increase provision. This is especially important for active collectors or collectibles that appreciate rapidly.
6. Appraisal requirements. Your insurance carrier should not require an appraisal—which can be costly and burdensone—unless the collectibles are very unusual or valuable. You should estimate and record the value of your collectibles utilizing your original purchase records, and other services such as price guides and grading services.
7. Scheduling requirements. Look for a policy that only requires you to list individual items over a certain value. Although a schedule may not be required at time of purchase, you should keep an inventory of your collection including purchase records and pictures/video. (See “Preparing for a claim.”)
How to determine the value of your collection
Make sure your collectibles are not valued at cost or depreciated value; in most cases collectibles appreciate rather than depreciate in value. Collectibles should be valued for insurance purposes at replacement value, or the cost of acquiring similar quantities and quality of collectibles.
Not sure what your collection is worth? There are a number of free and for-fee online resources you can use as starting points, including Kovels.com, WhatsItWorthtoYou.com (also wiw2u.com), PriceMiner.com, and Prices4antiques.com.
Preparing for a claim
In the event that tragedy strikes, you can expedite matters and maximize your claim by taking a few simple steps:
1. Create and maintain an inventory of your collection. Having a current inventory helps you and the insurance carrier substantiate the value of the claim.
2. Take pictures or video of your collection and keep them with your inventory. When taking photos or video, be sure to capture any and all markings that will authenticate the piece.
3. Keep purchase records such as receipts and invoices. If possible, scan these records to a computer so you have electronic copies.
4. Keep a copy of your inventory, pictures/video and purchase records in a secure, secondary location from where your collection is housed, such as a safe deposit box or e-mail or save them to your work computer. Not sure how to get started inventorying your collection? Check out www.iTaggit.com or www.collectify.com for inventory services developed for collectors.
Understanding exclusions
Virtually all insurance policies feature common exclusions such as governmental seizure or destruction of property, war and nuclear. Other exclusions common to collectibles policies include gradual deterioration such as fading, creasing, denting; nesting, infestation or discharge or release of waste products or secretions by insects, rodents or other animals; dampness or dryness of atmosphere; changes in or extremes of temperature other than fire; fraudulent, dishonest or criminal acts; voluntary parting with covered property; loss or damage while being worked on by you or others working on your behalf. Because exclusions vary by policy, it’s important to read your policy closely to understand what is covered and excluded.
You’ve spent years building your one-of-a-kind collection. Now take a few moments to protect it. Don’t take the chance of becoming a victim twice.
About Collectibles Insurance Services, LLC:
Since 1966, Collectibles Insurance Services has been “insuring today’s treasures from tomorrow’s tragedy” and offers specialized policies to cover most types of collections for a wide range of losses. For more information, call Collectibles Insurance toll-free at 888-837-9537 or visit www.collectinsure.com.