Basic homeowners’ insurance policies often not enough
By Melissa Neis
Valuables and collectibles – whether coins, fine china, musical instruments, jewelry or art – have special meaning for many and can evoke warm memories of travel and adventures, or reflect great passions and interests. But are these cherished possessions adequately insured from theft, loss or damage? The answer may surprise you.
Many people are unaware that their valuables are improperly valued or under insured. Typical homeowner’s insurance policies only protect your place of residence, personal liability and the general contents of your house, and limits for valued items typically range from $1,000 to $5,000.
If you rely solely on your homeowner’s policy, you most likely will face significant financial costs if your treasured items are lost, stolen or damaged. For adequate peace of mind, consider protecting your prized mementoes, collections and pieces with an affordable insurance option designed specifically for fine possessions.
Start By Appraising Valuables
The first step to assure ideal insurance coverage and policy limits includes working with a qualified appraiser to have an up-to-date value assessment of your possessions. Insurers require appraisals to validate an item exists and confirm the value, and serves as a description in the event of a loss.
An appraisal also can assist in asset management, estate tax returns, estate planning and in the distribution of assets. And, it can help establish equitable distribution of jointly owned items, determine a donor’s income tax deduction for charitable donations and prove the value of an object for sale or purchase.
When selecting an appraiser, consider a recommendation from a trustworthy source. Also, choose a qualified professional who is certified by a nationally recognized organization. The appraiser should have at least five years of field experience – the minimum amount necessary for membership status in a professional appraisal organization.
As you search, be sure to ask to see the appraiser’s curriculum vitae, a professional resume that will show the person’s expertise and experience.
In addition, ask the appraiser to clarify the fee structure in writing and to share a sample appraisal. Fees should be hourly, daily or a set rate and never commission-based as that practice is considered unethical.
Once you have selected a professional appraiser, the process should feature the following elements:
1) Statement of purpose (insurance, donation, etc.)
2) Sworn statement of objectivity from appraiser
3) Full description and identification of objects or items
4) Condition of objects and their origin
5) Firm statement of value (not ranges or estimates)
6) Discussion of how value was arrived at with supporting documentation
7) Signature of appraiser
As markets fluctuate, so does the value of your pieces. Thus, it is recommended that you have your appraisals reviewed every three years.
Insuring Valuables
With the appraisal complete, the next step is to choose the right insurance coverage. As mentioned previously, basic homeowner’s insurance is not enough to cover your cherished valuables.
You will want to choose an insurance policy that offers broad coverage based on the item, value and location. Consider if items are transported and where. A broad policy will cover many unforeseen circumstances such as storms, smoke damage, breakage, mysterious disappearance, pairs of items, sets and parts, and appreciation.
There are two main forms of additional insurance coverage for your fine possessions. One is to insure each item individually with additional floaters to your home insurance policy. A floater covers one specific piece of personal property. The other option is to buy broader blanket coverage for each category of valuables, such as jewelry, antiques, art, wine or collectibles.
With the more expensive itemized option, you schedule, or list, each item individually, while with the less expensive blanket option, you select a total limit of coverage and do not itemize.
Despite the fact that it often requires appraisal of items, it’s in your best interest to itemize if you have a number of very expensive items.
For less expensive items, consider blanket coverage. If you choose blanket insurance, be sure to keep all of your information handy such as appraisals, bills and receipts for these possessions.
No matter which insurance option you choose, be sure to maintain an inventory along with proof of the value of all of the significant belongings in your house for the insurance company. If you didn’t schedule the items in the policy, you’d have to present this proof to the insurance company.
A sentimental loss is hard to replace. Insuring your valuables will provide peace of mind and protect the special things you’ve acquired and grown to love over the years.