Insuring Collectibles: You May Not Have the Coverage You Need

Over the years, you’ve developed an impressive collection. Maybe it’s art or jewelry, or maybe it’s trading cards or rare toys. Regardless of what you collect, the point is that you’ve put a lot of time and money into it, and now it’s worth something. Here’s what you need to know about insuring collectibles.

Your Homeowners Policy Might Not Cover Your Collection

A standard homeowners insurance policy includes coverage for personal items, so you might mistakenly assume that your collection is fully covered under your current property coverage policy. Unfortunately, this false belief can result in significant losses with no insurance coverage.

Let’s say your house is insured for $500,000. This limit applies to your house structure, but it is not the only limit in a typical homeowners insurance policy. For example, your policy may have a separate limit for liability coverage. Additionally, your policy will typically have special limits for various items, such as cash and jewelry.

The personal item limit is typically much lower than the total limit, and the exact amount of coverage that you have will vary depending on your policy terms. For example, if your house is insured for $500,000, the personal item limit may be half of that, or $250,000. Furthermore, this is the total limit for all of your personal items. The limit for each individual item may again be much lower.

According to the Insurance Information Institute, the limit for theft of an item is generally around $1,500. Likewise, Investopedia warns that some homeowners policies put limits of around $500 to $2,000 on non-household items and that some items are excluded from coverage completely.

Take a look at your homeowners or renters insurance policy. There’s a good chance you have special limits for certain individual items. If you own items that are worth more than the covered amount, or if your collectibles are excluded from your policy, you may want additional coverage.

You Can Schedule Your Collection to Get Insurance Coverage

You can obtain additional coverage for your collectibles by scheduling your items with your insurance company.

Scheduled items are listed individually in your insurance policy. By scheduling these items individually, you can make sure they are fully covered.

According to Investopedia, another benefit of scheduling items is that you may be able to secure protection for additional types of losses that are not covered under the main policy, such as if you accidentally lose or damage the item. Additionally, you may not have to pay a deductible if you file a claim for the scheduled item.

Alternatively, if you cannot get the insurance coverage you need from the insurance company that provides your homeowners or renters insurance policy, you can purchase a separate collectibles insurance policy from another insurance company just for your collection. Sometimes, it’s smart to shop around for the best collectibles insurance coverage.

You’ll Need to Know the Value

Before you can schedule coverage for your collection, you need to know what it’s worth. However, determining the value of a collectible isn’t always simple. The amount that you paid for a piece of fine art or an antique years ago might be far less than the current value. If you find the right buyer, you might be able to charge a pretty penny now.

According to PBS and Antiques Roadshow, there are three types of values that collectors should know about: retail value, auction value and insurance value.

1. The retail value is the price that an item would sell for in an antique dealer’s store. Antique dealers often sell items at a higher price than what they paid at auction.
2. The auction value is the price that an item would be expected to go for at an auction. Although competition might drive up prices for highly desirable pieces, more common pieces often go for less than the retail price.
3. The insurance value is the amount needed to replace an item. This value comes from a formal, written appraisal.

When we’re talking about insuring collectibles, the insurance value is the most relevant value.

Have Your Collection Appraised

If you have a single item or collection that you need to insure, one of the first steps is getting the item or collection appraised.

You want to make sure the appraisal is as accurate as possible. If the appraisal is low, you might not have enough coverage if you experience a loss. If it’s high, you might end up paying too much in insurance premiums. Do your research to find a reputable appraiser who is experienced with your type of collection.

Your Collection’s Value May Change Over Time

After you have your collection appraised and insured, you will need to monitor the value for changes.

Many items lose value over time, a process called depreciation. However, collectibles are often different. Your collection may increase in value. If interest in the type of collection you have increases, you may find that your collection is worth a lot more than it used to be. In this case, you may need to have your collection reappraised and adjust the insurance levels accordingly.

But an increase in value is not guaranteed. For example, if you do not take good care of your collection, it may lose value due to damage. Wear and tear is not typically covered by insurance, so you will not be able to file a claim for these losses.

It’s important to take good care of your collection.

• Light, temperature and moisture levels can cause damage, so where you store your collection can matter.
• Use protective coverings if appropriate.
• When cleaning your collectibles, make sure you are not causing damage.
• Research proper care for your particular collection, whether it’s fine art, sports memorabilia, wine or something else.

Do You Need Help with Collectibles Insurance?

If you have a collection that is not insured, or if you recently started a new collection, you need the right insurance. Give us a call; we can help you with insuring collectible.