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Do you need Specialized Insurance Coverage?

You've spent years building your collection - anything from fine art, fine wine to sports memorabilia. So, should you invest in specialized insurance coverage?

The answer is: it depends! A salient difference between homeowners policy and a collectibles policy is the valuation of items. Homeowners policies tend to insure objects for actual cash value while collectibles policies insure for the full collectible value of items in a collection.

With the above statement, it then comes down to your collection and its valuation. Homeowners policies generally only covered named perils (fire, water damage, etc.) and exclude coverage for items in transit (mover's insurance). Collectibles policies may include all-risk coverage (include items that you are moving, or storing, or that are accidentally broken). Additionally, collectibles policies only require an appraisal in the event of a claim (and may require a more detailed inventory only for those items that exceed a certain dollar threshold). Homeowners policies typically require appraisals for collections that exceed $5,000 as part of their underwriting process in addition to a detailed inventory of objects in the collection.

Then, there is the claims process itself. Zero-dollar deductibles are the standard for collectibles insurance policies (and some offer additional deductible options). Homeowners policies may offer zero-dollar deductibles but its not common. The typical per-item limit for fine art and collectibles generally ranges from $500 to $2,000 for a homeowners policy (without a rider or floater). Even with a rider/floater, homeowners policies tend to set a limit on the maximum they will pay out on a claim for such collections. And then there's always the possibility that filing such a claim against your homeowners policy could result in premium increases when you renew. A separate collectibles policy doesn't impact your homeowners premiums or loss history.

The ultimate decision on whether to invest in a separate collectibles policy depends on:

* The value of your collection (is it above $20,000 as an example)?

* What your specific homeowners policy covers and doesn't cover for your collection (hint: it's good to ask!)

*Based on the value of your collection, what would happen to your premium costs for a claim against your Homeowners policy? What would be the deductible under a Collectibles policy?

If you have a collection of some value, it may literally pay to research specialized insurance policies that better fit your needs! Credits: "The Intelligent Collector: Insurance: The Benefits of Specialized Coverage" by James Appleton.

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