This is something that most collectors do not think about, yet they ought to. If you’re looking to protect your collection from unforeseeable catastrophes or natural catastrophes the homeowners or renters policy most likely, doesn’t provide enough. It’s likely to not adequately pay you for the market value currently that your collection has.
If you’re a collector of the past or simply rip off new wax products there are options that are cost-effective to safeguard the investment the collection has made. Two firms that specialize in collecting insurance include Collectibles Insurance Services LLC (CIS) and Cornell and Finklemeier (CF). Both have been providing the memorabilia and sports cards market for some time
Concerning the necessity of having separate insurance for collectibles CF Chairman Tom Finklemeier said, “There’s still a flea market mentality among some dealers. They love the things they sell but many of them figure nothing will happen. For those who sell full-time, it becomes doubly sad when they lose not only their inventory, but their income.”
What Does Collectibles Insurance Cover?
Based at Maryland, CIS has a long history in providing insurance for collectibles of all types. As one of the companies that are members of Diamond State Group, CIS offers dealers and collectors by offering insurance plans that provide coverage for a range of situations, including burglary fire, theft or flood damage, as well as natural catastrophes. Also, coverage is provided in the event of damage or loss that occurs during shipping, personal transportation and during exhibition.
Another major participant in the insurance for collectibles marketplace is the Ohio-based Cornell along with Finklemeier. Finklemeier is believed to have created one of the very first policies exclusively for collectibles over 25 years back. Finklemeier is the sole company of Travelers Insurance, who underwrite the policies for collectibles and currently covers between $75 and $100 million worth of memorabilia and sports memorabilia. As the official insurer for the National Sports Collectors Convention, CF is knowledgeable about the unique requirements and specifics of the market for sports collectibles.
As with CIS, CF offers dealers and collectors a full protection against earthquakes, theft, and floods with only a few exceptions. CF further caters to the collectibles market by having a collectibles-specific policy form. Values with CF are basing on Fair Market Value.
How Does It Work?
We spoke to Annemarie Fitzpatrick, the Underwriting Director of the division of collectibles for CIS She explained the way insurance for collectibles operates and why it’s crucial. It is understandable that many collectors worry about being required to keep meticulous inventory records. However, Fitzpatrick declares the following “A complete inventory is not required except for items valued at $5,000 or more.”
Although inventory records aren’t required when applying to purchase insurance, she noted that “CIS strongly recommends its customers maintain an inventory to streamline, provide proof and expedite claims in the event of a loss.”
She goes on to say, “No pictures are required but they are recommended, especially for high-value items.” She continued to say that “In most cases, your homeowners insurance is designed to cover personal property and is not nearly enough to protect your collection.”
Collectibles Insurance vs. Homeowners Insurance
There are many key differences between collectibles insurance as well as standard homeowners insurance. The majority of times, a homeowners or renters insurance policy can:
- Limit the coverage of your contents to a certain percentage of the total worth of your house (usually 50-70%).
- Limit the amount they’ll be willing to pay for the theft of expensive items such as the 1999 Bowman Chrome Pujols signed rookie card.
- Do not cover losses caused by natural disasters such as floods, earthquakes, and hurricanes.
- The value should be based on the an actual value in cash (the actual purchase price as documented) and not on the amount of collectibles that the item is currently worth.
- It is required that you organize all items, which should include an itemized list of values and value.
The primary reason for having insurance on your collections is to ensure sufficient compensation in case of damage or loss. How does an insurance company determine the value of your collection? Fitzpatrick declared the following “Claims are paid based on replacement value at the time of the loss.”
This is a way to account for the increase in value since the point when certain items were initially purchased or acquired . This is the main distinction between a homeowner’s policy and insurance for collectibles.
Fitzpatrick advised that untrustworthy dealers and collectors should think twice before making an extra thought before submitting false claims “Insurance fraud is a crime. In the event of loss the adjuster for insurance will conduct a thorough investigation into the claim.”
This is among the main reasons why, although not required, it’s beneficial for the collector to maintain detailed documents.
If asked about the percentage of claims are rejected by the firm, Fitzpatrick said, “Only the smallest percentage of claims from collectors are rejected. The most commonly cited reason for denial of claims from collectors is dealer stock, meaning that insurance companies are acting in the capacity of dealer. CIS has a separate policy that covers dealers.”
CIS reminds collectors that some kinds of losses aren’t covered by the program. They include losses caused by military action, government seizures and, perhaps the most important to collectors, the damage or loss caused by rodents.
How Much Does it Cost to Insure Your Collection?
The cost for this kind of coverage are different. The factors include whether the policy covers collectors or dealers as well as the amount of deductible and the total amount of the policy.
An example of the costs associated with an insurance policy with CIS for a collection that has the estimated worth of $100,000 is $640 without deduction. The minimum loss for filing an claim must exceed $50.
According to the current prices in CF’s own application form Insuring a collection at $100,000 and the deductible of $1,000 is about $900 annually.
As you can observe, there are many differences in coverage and price. It’s the responsibility of each buyer to take an informed choice about what is best for them.
Below is a guideline and suggestions for buying insurance, keeping the inventory of your business and the process of filing an insurance claim.
Collectibles Insurance Checklist
1.) Find out if you’re a dealer, collector or both. Find out about your particular policy requirements.
2) Compare policies for:
- Different types of loss
- Cost per thousand of the estimated value of collection
- Inventory Requirements
- Policy Fees
- Terms of Payment
3.) Be honest when valuing your collection. The greater the value is, the more insurance coverage required. The more coverage, the higher price.
4.) Evaluate your collection based on the fair market value or actual replacement value.
5.) Keep an inventory copy and authentic certificates in a secure second site separate from the place the place where your collection is. For example, a safe deposit box, or an email you send to yourself.
6.) If you are taking photographs or videos from your collections, make sure to record any markings to assist in authenticating the item. Backup your digital copies across multiple sources, away of your collections. A cloud program , such as Dropbox is the ideal way to store these digital files.
7) If you lose money because of theft or burglary and you lose your property, make a police report immediately.
8.) If you suffer a loss you must collect your information and notify your insurance company as soon as you notice a loss. Provide the following details:
- Contact details
- Policy number
- The nature and location of the loss
- Date of loss
- Claim amount
- Inventory sheets, photographs and videos police reports documents, authentic certificates, receipts etc.