If you are among the estimated 40% of people in the U.S. who maintain a collection of high-value items, chances are good you’re also among the many people who believe their prized collection is covered in the event of a loss.
But consider this: most personal property coverage with your homeowner’s insurance is a percentage of the value of your home (usually 50-70%), and insurers place limits on the reimbursement value of individual items. If the value of your collection exceeds that limit, you’re out of luck.
Here’s how to insure your collectibles.
Why insure your collectibles?
You carry homeowners insurance as required by law, so why purchase additional insurance for your collectibles?
If the price of your collection (or a single item within it) exceeds your home insurance personal-property limit, you’ll want to add coverage. This can protect you against floods, fire, and theft.
Keep in mind that although most homeowners insurance does have limits on collectibles, a policy may cover them partially. It’s important to understand what is already in place and what you’ll need to supplement.
What is considered a collectible?
While it is possible to collect anything, some common high-value collectibles might require additional Insurance. These include:
● Fine wines
● Baseball cards
● Luxury dinnerware like fine china and porcelain
● Comic books
How to insure your collectibles
Step 1: Take inventory
The first step to determining if you need to purchase additional insurance for your collectibles is to figure out exactly what you have.
● Look for sales receipts and other documents to verify the value of the collectible (and your ownership).
● Take pictures from many different angles.
● Store this information away from the collectibles.
Step 2: Get an appraisal
An appraisal establishes the value of your collection. This is a critical piece of information to present to your insurance company so they can determine the appropriate level of insurance coverage. Insurers want to know what the retail replacement value is so they can provide the best quote.
This process is similar to getting a home appraisal in that it’s necessary to identify the market value for comprehensive insurance coverage.
Getting an appraisal should be repeated periodically. This allows for inflation-related adjustments to the value so that you maintain the best level of insurance.
Step 3: Check in with your insurance company
Unlike the home appraisal that is required to obtain a conventional mortgage, your insurance company won’t know you need extra coverage unless you tell them.
Give your company a call and go over your current policy. They can help you determine:
● If existing coverage is adequate
● If specific coverage for certain items is better than broader coverage (e.g., insurance for specific pieces of jewelry versus American Collectors or another type of broad insurance)
● How adding coverage affects your premium
● If your deductible is at a good level
Your insurance company generally uses the agreed value to determine coverage. This is the amount paid if the loss occurs. It is not necessarily the stated value that you provide because that may not be the market value at the time of the loss.
Step 4: Keep up with your collection
The value of your collection, and your insurance needs with it, may fluctuate depending on inflation and whether or not you add or sell items.
Take the time to reassess your collection at least once a year. This is a good time to check in with your insurance company, too. They may have new products to tell you about or might suggest adjustments to your coverage if needed.
Filing a claim
If you suffer a loss to your collection, you’ll need to file a claim.
If your loss occurs due to a governmentally declared natural disaster, you may be eligible for benefits from the Federal Emergency Management Agency (FEMA). Even if this is true, start by calling your insurance company.
Since you have taken the time to properly document and appraise your collection, you’ll have solid numbers to report. Every insurer has a different process, but generally, they will:
● Visit to assess the damage if possible
● Review documentation
● Provide information for filing claims to FEMA, if appropriate
● Offer a written estimate of the loss, indicating any deductibles
If you do not agree with the assessment of the loss, it is possible to ask for an adjustment. Your insurance company may require additional documentation.
Should you insure your collectibles?
It may cost more in the short term, but collectible insurance is worth it. If the worst should occur, insuring your collectibles can protect you financially and help you to rebuild. And that is priceless.