From antiques to fine wines, books to sports memorabilia, a collection isn’t just a pastime. It’s an investment. Of course, you’d rather have your unique collection than the money, but if you lose your precious collection, money is the only way to recoup those investments. That’s where collectibles insurance comes in.
Collectibles Insurance works much like the policy riders homeowners buy to cover jewelry or artwork kept around the house. This insurance protects a broader range of potential incidents than typical homeowner’s policies do, and assures you aren’t out a hefty sum if something atypical happens to your collectibles.
When does homeowner’s insurance cease being sufficient, requiring you to buy collectibles insurance? These are some indications it’s time to invest in additional protection for your collection.
1. The Collectibles are High-Value
A baseball card collection worth a few hundred bucks likely doesn’t justify a separate policy. These types of collections, at the level of a simple hobby you like to dabble with, can usually be covered under your homeowner’s policy. However, when the collection becomes valued in the thousands of dollars, it’s probably time to invest in a collectibles policy. Usually, an ordinary homeowner’s policy won’t reimburse you for values this high without a rider or separate, specialized policy in place. The exact amount varies according to your particular policy and insurance company, however, so before assuming that a separate collectible policy is or isn’t necessary, follow these steps:
- Go over your existing homeowner’s policy and evaluate what is and isn’t covered.
- Thoroughly document your collection, preferably with both written and photo documentation.
- Get the collection appraised so that you know the actual value and aren’t guessing about its worth.
- Talk to your insurance agent or find an agency that specializes in insuring valuable collectibles.
2. To Cover Events Excluded from Your Homeowner’s Policy
Homeowner’s policies cover specifically defined events, not just any incident that happens to cause damage to your collectibles. This is why residents of California have to acquire special earthquake policies and why people who own beachfront or lakefront property need flood insurance. Most ordinary homeowner’s policies generally exclude certain events from coverage. If your collectibles become damaged by a non-specified or excluded event, your homeowner’s policy isn’t liable for those damages. Collectibles insurance addresses typically excluded incidents, such as:
- Collapsed shelving that damages or destroys a collection
- Theft not be covered by homeowner’s policies
- Flooding from a busted water pipe or rising water (most flood damage isn’t covered through a homeowner’s policy)
- Loss that occurs when mailing or receiving collectibles via mail
- Natural disasters that aren’t covered by homeowner’s policies (like earthquakes and rising waters due to flooding)
In order to protect your investments in these events, you need a separate policy covering your collection.
3. To Assure Replacement Value Instead of Fair Market Value
A common problem when making insurance claims is the homeowner’s understanding of what the policy actually covers: “replacement value” versus “fair market value” or “actual cash value.” Most owners of collections want to get enough payout from their policy to restore the full collection, or at least to restore the collection as close as possible to its original status. However, most homeowner’s policies pay out a value less than the actual cost to replace the item at its full replacement value. With a collectible insurance policy, the policy owner understands exactly what’s covered and the actual policy payout potential, based on the damage to the collection and losses incurred. This includes reimbursement for any one-of-a-kind items that aren’t replaceable at any price.
4. To Protect Your Investments in the Collection
Sometimes, collections aren’t just hobbies. Many collections serve as actual investments toward retirement, potential long-term disability, or in case a business fails. If this describes your collection’s purpose, it’s essential that those investments are thoroughly insured, so that a sudden, unavoidable mishap doesn’t derail your retirement plans or make it necessary to sell something else of value to cover business losses or an extended illness. If you’re depending on the investment value of your collection for liquidation, collectibles insurance is a must-have.
To get the coverage you need on your prized collectibles, or if you have any questions regarding collectibles insurance, contact us at Surmount Insurance Services today.