Do you have a prized collection in your home? If so, it may be worth more than you think.
The value of collectibles and other precious articles has been increasing rapidly in recent years. For instance, the demand for pre-owned luxury watches alone is expected to grow by up to 75% by 2030,1 and the global wine market is expected to see annual growth of 4.6% until 2030.2
So whether you collect fine art, luxury watches, designer purses, jewelry, or even wine, you’ll want to protect your investment against financial losses associated with a variety of risks. To do so, you must obtain proper insurance coverage.
Will your home insurance policy cover valuable articles?
Homeowner insurance policies often limit coverage for collectibles and other valuable articles. This can leave you vulnerable to shoulder not only a deductible but also a sizable portion of your collection’s full financial value.
Let’s put this into perspective.
Imagine you have luxury watches or even an engagement ring worth $20,000, and your homeowner’s insurance policy has limited jewelry coverage, such as $7,000. This could mean you’ll have an issue if your ring or watches are stolen or damaged. In this scenario, you would only receive up to $7,000, minus your deductible, to compensate for the stolen or damaged ring and watches.
Thankfully, there is a solution—an insurance rider.
Why is an insurance rider important?
An insurance rider or floater refers to an addition to your existing insurance policy that allows you to include extra coverage. For valuable articles, you can have a rider specific to your collection to help protect these items against financial losses from insured risks. An insurance rider benefits anyone who owns high-value items that may require coverage beyond what their homeowner policy provides.
Remember the example about luxury watches and the engagement ring?
With an insurance rider, you can make sure you’re able to receive the full financial value if the ring or watches were stolen or damaged due to an insured risk. Thus, if your engagement ring was worth $20,000, your insurance rider could cover the full amount without a deductible.
Find the right financial solutions that best suit your needs.
How to get the right coverage for your collection
Regardless of a collection’s specific value, if you own valuable articles like fine art, wine, and jewelry, you need to have the right level of insurance coverage. Without this, you may have to shoulder some or all the financial losses if these items are damaged, destroyed, or stolen.
Here are three essential steps to ensure you get the right level of insurance coverage:
Conduct an inventory and appraisal
To determine if you have the right level of insurance coverage for your valuable articles, conduct an inventory to assess their estimated value. Then, look at what your homeowner policy offers for particular limits.
Now, imagine your collection of wine or jewelry had an estimated value of $50,000. If your homeowner’s policy only has limited coverage of around $10,000 for these types of items, you don’t have enough protection. If this situation arises for you, getting a full appraisal to detail the value of your collection accurately is crucial.
Appraisals can:
- Provide the description of the items an insurer requires if they need to replace it
- Allow for no deductible
- Accurately schedule items to be covered
- Reveal what kind of insurance rider may be necessary to ensure proper coverage
You should typically have an appraisal redone every five years.
Choose between blanket and itemized coverage
With insurance riders, you can choose between blanket and itemized coverage. Which one is right for you depends on the specifics of your collection of valuable articles.
Blanket coverage provides an overall dollar amount for your collection. It eliminates the need to list each item and its value to get coverage, which can be effective for wine collections if you’re regularly rotating bottles due to consumption. Otherwise, you may need frequent appraisals for each bottle to receive proper coverage.
Itemized coverage lists each item you want covered, with an appraisal required for each, including items added after the initial insurance date. This can be helpful for jewelry collections, thanks to the details appraisals provide. The key pieces of information in a jewelry appraisal are the item’s identifying details, the insured’s name, as well as the date. The identifying details are particularly beneficial, as they help ensure an exact replacement can occur if necessary.
Determine the covered risks
When you’re working on getting the right level of coverage for your valuable articles, you need to understand what your insurance rider will cover. This can vary, but most insurance riders cover theft, vandalism, fire, and accidental damage. There are also ‘breakage’ and ‘non-breakage’ riders. Some may even cover financial losses associated with vibration, light, humidity fluctuations, and temperature extremes. Consider the likelihood of the various risks in your situation, as well as your risk tolerance, when selecting an insurance rider.
Next steps
Ensure your valuable articles are protected from financial losses by talking to an experienced insurance broker like Cowan. With our wealth of knowledge and experience, Cowan will help you select insurance coverage that matches your unique needs and risk tolerance.
Contact Cowan Private Client today for personalized recommendations to protect your most valuable articles.
Sources
- Robb Report (14 October 2022) The Pre-Owned Watch Market Is Expected to Surge Thanks to Millennials and Gen Z. Retrieved from URL. ↵
- Research and Markets (October 2024) Wine – Global Strategic Business Report. Retrieved from URL. ↵
