If your collectibles were lost, damaged, or stolen, would they be covered by insurance?
When asked this question, most people would emphatically respond, “Yes, of course it is.” Unfortunately, that’s not always the case. Most collectors wrongly assume that their collection is adequately or wholly covered under their homeowner’s insurance policy.
Want to make sure you know what is; and what isn’t, covered under your policy? I have a simple suggestion: pick up the phone and talk to your insurance agent! When speaking with your agent, make sure they understand the nature of collection and the purpose of your call.
You will want to ask about:
- Policy limits or terms
- How value is determined if a loss in incurred
- What is not covered (i.e. accidental breakage)
And don’t forget, as the policy holder, you also bear responsibility and will need to understand what obligations you must meet.
In most cases, you will likely need to purchase an additional insurance policy; referred to as a rider, which can be attached to your existing homeowner’s policy. Depending on the nature of your collection, you may want to explore options provided by specialty collectibles insurers. For example, American Collectors Insurance and Collectibles Insurance Services are two such companies that specialize in collectible insurance.
Collectibles insurance vs. homeowner’s insurance
Appraisals – Most collectibles insurance policies do not require appraisals during the application process whereas homeowner’s policies will typically require appraisals for collections valued at $5,000 or more.
Deductibles – A zero-dollar deductible is extremely common for collectibles insurance policies. While some homeowner’s policies may offer zero-dollar deductibles, it’s not standard practice.
Limits – Collectibles insurance policies typically have a much higher coverage amount versus homeowner’s policies. For example, a standard homeowner’s policy may provide collectibles coverage up to $2,000 before a rider is needed. Even when a rider is added, it may not provide the coverage needed to adequately insure the full collectible value of your collection.
Coverage – The way insurers assess the value of covered items is one of the most important differences between homeowner’s and collectibles insurance. Typically, homeowner’s policies will insure the actual cash value of the items whereas collectibles policies insure the collectible value of the items. This difference could equate to a staggering difference in claims payments if a loss were incurred.
Another important distinction between the two types of policies are the types of losses that are covered. The vast majority of collectibles insurance policies cover a wide-range of losses from theft, fire, and flood to natural disasters and accidental breakage. Also, collectibles insurance will also provide coverage for items lost or damaged during shipping, personal transit and exhibition whereas a homeowner’s policy limits its coverage to items lost or damaged while in the “home.”
Claims – When collectibles are insured through a separate collectibles policy, claims will not affect their homeowner policy premiums. In addition, collectibles insurance companies tend to have more expertise; or access to expertise, in the areas they insure. This can be extremely helpful in expediting a positive outcome in the claims process.
Regardless of your preferred choice of insurance, remember that it is up to you to present and prove your claim. As such, it’s vitally important to keep detailed records of the items in your collection, including high resolution photographs.
Keep your records in a safe and secure place so they can be quickly accessed in the event of a loss. It’s also a good idea to attach a copy of your insurance policy to those records. Collectibles inventory applications such as RelicRecord.com can help you with all of the above.
Lastly, it’s always a good idea to regularly evaluate the value of your insured items. Collectibles can fluctuate in value which may drive you to seek additional coverage or to reduce coverage.