From fine art and vintage wine to Fabergé eggs and shrunken heads, the variety of what people choose to collect can be vast, impressive or even amazingly eccentric. More amazing still is how much these collections actually are worth. Even the most experienced collectors might not know the ins and outs of assessing the value of their most cherished valuables and how to protect their treasures accordingly.
It is crucial to treat any collectibles, be it art, wine or even baseball cards, as investments. Numerous unforeseen hazards and uncontrollable factors can ruin your collection, causing significant financial loss and often sentimental loss.
“Properly protecting collections you are passionate about includes planning ways to prevent loss and properly insuring your items if a loss does occur,” suggests Bob Courtemanche, President of Personal Insurance at Fireman’s Fund Insurance Company. “If they are already insured, be sure to understand their most recent appraisal value and the terms of your policy regarding exactly what is and is not insured. The right protection can help prevent major emotional and/or financial distress if catastrophe strikes.”
The following are three common misconceptions about insurance coverage for valuables and collectibles:
Misconception: “I insured all of my collectibles five years ago, so I’ll be covered if anything happens.”
Reality check: If the collectible appreciates in value, in most cases it will be covered for its last appraised value, not for its appreciated value.
Tip: Conduct periodic appraisals. Although a few insurers, including Fireman’s Fund, will pay replacement costs of up to 150 percent of the insured value if the value of the collection has escalated, it is still best to conduct periodic appraisals to ensure full coverage. Have all of your valuables and collectibles appraised every three years. An appraisal should include the artist, date, media and title of the work, dimensions, notation of condition, summary of provenance and photographs (front and back). When getting an appraisal, request a second copy to keep in a safe deposit box or a copy that can be stored digitally off-site from your home. As your artwork appreciates, be sure that your insurance limits reflect that increased value.
Misconception: “My grandmother’s Tiffany lamp is insured for its market value, but its sentimental value is worth so much more to me. Clearly, insurance would never consider the sentimental value.”
Reality check: Insuring an object can help mitigate the sentimental loss if a piece is damaged.
Tip: If a beloved piece is damaged, a knowledgeable insurer can work with you to have it restored by a qualified art conservator. If a piece of fine art is stolen, the best insurers can also coordinate with law enforcement and art investigators to retrieve the lost piece. Recently, when a valuable painting was put up for auction, Fireman’s Fund Insurance was part of the recovery action that helped return the stolen piece to its rightful owner years after the theft.
Misconception: “I bought a precious vase while vacationing in Europe, but damaged it before I was able to add it to my current insurance policy, so I’m out of luck.”
Reality check: Some insurance policies automatically cover valuable items as soon as they are purchased, if you already insure similar items. This automatic coverage may extend for weeks or months.
Debbie Armour has 23 years experience handling Personal Insurance Exposures. She is currently the Personal Lines Manager with Interwest Insurance Services, a Fireman’s Fund Platinum Agency. Interwest is the largest, Independent agency in Northern California, and partners with Fireman’s Fund to bring high value, competitive products to their clients. Armour can be reached at 916-609-8458 or darmour@iwins.com.
