People collect all kinds of things: coins, stamps, rare books and artwork, memorabilia and yes, even ceramic pigs or matchbook covers! For some strange reason, there seems to be a “collector’s instinct” in all of us. But no matter the reason, collections have a tendency to grow in “value” as time goes on. This value can be expressed in terms of “intrinsic value” (such as that represented in gold or silver coins), or in terms of “collectable value” (i.e., the “worth” of an item to another collector, based on emotional, or subjective criteria). This latter value can only be established by the “willing buyer/willing seller” test for a particular collectable.
Perhaps because most collectors collect simply for the love of collecting, their collections are often overlooked as something that should be insured. This is especially true for collections that started out small and have grown over the years to represent sizable investments for their collectors. Many Bible collections fall into this category. And, even though they might not like to admit it, most Bible collectors would be extremely disappointed, to say the least, if something bad were to happen to their collections. In this world, the threat of theft, or damage due to fire, flooding, etc. is very real. There is the possibility however that some, if not all, of the value in your collection could be protected through an appropriate insurance policy. This article is an attempt to remind you of that fact, and to provide a little guidance in this area.
People often overlook the fact that a standard home-owner’s policy is not designed to protect their collectibles. Also often overlooked, is the need to re-appraise your collection frequently in order to increase your coverage, even though it is recognized that some of your treasures will not be able to be replaced by items of similar value. Most home-owners’ policies cover the contents of a house to 50 percent of higher of the insured value of the home. (You can find policies extending 100-percent coverage, but you of course pay a higher premium.)
In addition, most policies limit the amount that will be paid for certain types of items. Standard policies will pay up to $2,500 on silverware, silver, gold ware and like items; $1,000 to $2,000 for jewelry, watches, furs, or semi-precious stones; $1,000 for securities, manuscripts, deeds; $200 for coins and cash. Most policies also set a $250 deductible on each claim you file.
Obviously, the blanket coverage in a standard policy for unscheduled items - those not listed or described in an attachment to the policy - is likely to be inadequate for most collectors.
Collectors can obtain adequate coverage by buying a personal-articles floater: a rider or supplement to a home-owner’s policy that lists separate items at an appraised value. The coverage applies regardless of where the insured items are taken or stored. If a claim is made, however, the insurer determines whether the stated values have held up since the policy was issued. Thus it pays to re-evaluate your collections periodically.
A word to collectors who buy and sell at trade shows. If your love of collecting has turned into a regular profit-making venture, your home-owner’s policy - even with a floater - will not cover you. Ask your agent about a small-business policy.
You’ll want to be aware, too, that with a standard floater, insurers have the option to replace the lost or damaged articles rather than pay in cash. Insurers are often able to buy at wholesale or discounted prices, so replacement may be cheaper for them than paying the market value. If your insurer wants to replace an item, and you reject the offer, you may get a cash payment equivalent to what the insurer would have paid for the discounted replacement. If the cash-or-replacement scenario bothers you, look for a valued contract policy that guarantees to pay your claims in cash according to the values scheduled on the policy. Note: You may pay a higher premium to get such coverage, and you’ll find that not every company writes valued policies.
Another type of insurance to consider is a fine-arts policy, but you may have to go to a large specialized insurance company to find one. It resembles a floater but is not attached to your home-owner’s policy (or any other type of policy.)
Any home-owner’s policy will have its exclusions, so examine the differences in deciding which coverage to purchase. A few common exclusions: accidental breakage, wear-and-tear, gradual deterioration, inherent defects, damage by vermin, mistakes by framers and restorers. For very valuable items, insurers may require certain security precautions such as burglar alarms and smoke detectors.
Rates will vary dramatically according to what you’re insuring and where you’re located. You may pay anywhere from 80 cents per $100 of annual coverage to $5 per $100 coverage on a floater policy.
Though you do want to be adequately covered, there is no point in paying higher premiums for inflated valuations that your insurance won’t pay out on when the time comes. Getting an accurate valuation of your collectibles is therefore important, as is updating it periodically. The better your records, the quicker your settlement, should you be hit with a loss.
You need to keep an itemized list, which you might augment with photos or videotaped records as an extra precaution - but pictures aren’t required. On some items, insurers will accept sales receipts as sufficient evidence of an item’s value. In other cases you’ll need to hire an appraiser. Finally, preserve your painstaking records by keeping them all in a safe place away from home.