Are Your Valuables More Valuable Than You and Your Insurance Company Know?
There are many limitations and exclusions on a home insurance policy. Some of them pertain to Jewelry, Art, Antiques and Collectibles. Many people believe that since they have insurance on their personal property, all items are insured. In this issue we will look at these items to review your exposure.
Almost everyone loves to get jewelry. Some pieces of jewelry are more expensive than others and everyone has a different idea of what expensive is. EVERY home (condo, co-op, and apartment) policy has a limitation on how much jewelry is insured as part of the basic policy. This limit could be from $500 to $10,000 per claim, depending on your policy. This is the first question that must be answered. Some policies will let you increase a basic limit to $1,500 or $2,500. If you own more jewelry than your policy covers, you will need to decide if you want to insure that jewelry. There are two ways to add jewelry (and other valuable items) to your policy: Scheduled and Blanket (not every company allows Blanket Coverage).
You would give the insurance company a list of the items you want insured, providing a detailed description and value of each item. The insurance company would like an appraisal so the description and value are accurate. Those items would be listed on your policy and in the event of the claim, the value would be predetermined. We believe Scheduled is better for larger items and Blanket (see below) is good for lower value items. The price is usually the same.
You tell the insurance company how much total coverage you want and you would have coverage for that amount with a limit per individual item. You would not need to list individual items. The per piece limit might be $10,000.
Now you have done your job. You have reviewed your jewelry, scheduled your more valuable pieces and put some Blanket Coverage on your policy for the smaller items. This is not the end of it. You need to keep an eye on the values and not forget about them. Remember to add new items as you purchase them. Many people add an item, then 20 years go by and no changes are made. Then there is a claim. They do not understand why they do not get enough money to replace the item. Gold prices were fairly stable from 1980 to early 2000 at about $400 per oz. In the past five years gold has jumped to $1,200 per oz. Your gold jewelry could have tripled in value. If you have gold items that were valued prior to 1980, your situation is much worse as gold was under $200 per oz. Diamonds have also increased dramatically in the past 10 years. If you have not reviewed your jewelry values recently, you could be under-insured at the time of a claim and not have the money to replace your jewelry. Some companies will have a limited version of Replacement Cost built in to a policy if you schedule items. This could protect you from minor fluctuations (increases) in values between appraisals.
Art and Antiques
Many people like to have Art or Antiques in their home. Some may be valuable (more valuable than you think); some may be just sentimental. Some home policies will exclude from Replacement Cost an item whose value has increased by its age or notoriety. Do you know what the Actual Cash Value (Depreciated Value) of a 200 year old chair is? Not very much, even though it could cost several thousand dollars to replace it, if you could find another. Review your policy with your agent to determine how your Art and Antiques would be insured in the event of a claim. For the best protection, these items should be scheduled (see above for explanation).
Sports memorabilia, Hummel figurines, coins, model trains, wine and other items all have different exposures and problems when protecting value. Wine could go bad if not kept at the correct temperature or bottles could break. Without proper coverage, you might not have coverage. Home policies could limit or exclude these and other items from coverage. If you are a collector, you need to review your coverage for the particular item you collect to determine what steps you have to take to be sure your collection is properly protected.
Cameras, sporting equipment, computers and many other items can also be scheduled on your policy for better protection. Items that are included in Scheduled or Blanket Coverage usually are not subject to your policy deductible.
Make sure your “Prized Possessions” are properly protected. These items should be re-appraised every five to seven years to make sure values are current. Ask the question, get the answer. It is better to know what you are not covered for prior to the claim, than after.
We Can Help
For specific questions , please contact Brian P. Boak, CLU, LUTCF, at 201-837-1100 or Brian.Boak@singernelson.com. The above information is general in nature; review your policy for your specific coverage.