Did you know the average home contains more than 300,000 items? The average American home has nearly tripled in size over the last 50 years, according to NPR. Americans are collectors of stuff, and much of that stuff is valuable. Whether you have purchased your priceless collector’s items from exotic locations around the globe, inherited them or painstakingly monitored eBay to find them, you no doubt want to protect them. How much will homeowners insurance compensate me for my valuable collector’s items? Should I purchase collectibles insurance? Protect your valuables by taking the following steps.
- Take a Good Look at Your Homeowners Policy
Homeowners insurance is designed to cover your personal property in the event of a catastrophe, such as a fire. Personal property is fairly broad, covering items from furniture and wall decorations to clothing and kitchen utensils. However, many policies limit the coverage of non-household items, including collectibles, to a maximum of $500 to $2,000. Some deny coverage of collectibles completely. Even if your policy covers what you think your collection is worth, you may also consider this scenario. You verified you have a policy that would compensate you if your collectibles were destroyed in a house fire. However, what if a shelf collapsed and broke your precious figurine collection? Or, what if someone knocked over a valuable statue or the dog got ahold of your baseball card collection? Homeowners insurance would not cover these scenarios. Your insurance company may be able to add a rider to your current homeowners policy. If not, seek out a specialty insurer.
- Get an Appraisal
The best way to put a price on your collection is to get an appraisal, especially if it’s a specialized area. This will help you determine how much insurance you need and will avoid dispute if a claim needs to be made. Keep in mind that not all collections appreciate, while others may skyrocket. For example, Money magazine reported on the increased value of old video games. A Legend of Zelda video prototype from 1997 recently sold for $55,000. Conversely, in the 90’s people paid $1,000 for certain Beanie Babies only to find that the fantasy value faded, and they are only worth about $10 today. A claim on a collectibles insurance policy will be based on market value. The moral of the story is that appraisals should be updated periodically, especially if you have added to your collection.
- Keep a Written Record.
In order to make a claim, you will need to prove what you had. That may be impossible if a collection is damaged beyond recognition or stolen. Protect yourself by keeping a written log. Include a description of each item, the day you purchased it, the appraised value and any identifying characteristics, such as a model number. Take a picture of the item and the receipt, insuring electronic documentation. Be sure to keep your documentation in a safe place, such as a fireproof box.
- Choose Wisely.
Your homeowner’s policy may have an available rider to cover collectibles. However, carefully review the policy to ensure it meets your needs. It may be best to opt for a completely different policy with a different insurer, one that specializes in your type of collection. This is especially true for high-end items, such as art or jewels. Be sure the policy covers a range of losses, including fire, theft, breakage, and even loss through the mail. Policy premiums can range from thousands for high-valued items to less than $50 a year for a small personal collection of less valuable items. Consult with a trustworthy insurer.