By Richard A. McGrath, CIC, LIA
With the holidays long gone, it’s time to get back to a more normal schedule. But first, be sure to take a few minutes to sit down with your trusted independent agent to review your current insurance policies. And after the season of giving, it’s important to ensure that all of your new possessions have sufficient protection.
A recent national survey conducted by Trusted Choice® and the Big “I” found that 40 percent of respondents weren’t confident or were only somewhat confident in their coverage, and 30 percent didn’t meet or talk with their agent at all within the last year. It’s important to review your policies at least once a year to ensure all of the things that matter most to you are protected. Doing so can help ensure that you know the limits of your coverage and are taking advantage of any potential savings.
A standard homeowner’s or renter’s policy provides coverage for personal property, but this coverage is inadequate for high value items such as jewelry, furs, fine art, cameras, computers, china and silverware, stamp and coin collections, firearms, and musical instruments. Protection for valuable items is also limited to the covered perils on your policy such as fire, windstorm, theft, and vandalism. Since coverage is based on the item’s actual cash value (ACV), which is equal to the replacement cost minus depreciation, this means that your possessions may not be covered up to their actual worth when filing a claim.
Additionally, most insurance companies limit theft of valuable items on a primary policy anywhere from $1,000 to $5,000. For example, theft of jewelry, watches, and furs is limited to $1,000; theft of money and coins is limited to $200; theft of silverware is limited to $2,500; and theft of firearms is limited to $2,000. But what if your valuables are worth more than these predetermined amounts? And what if you accidentally lost or misplaced one of your possessions? That’s where valuable articles insurance comes into play.
Types of Coverage
A valuable articles policy, also known as a personal articles floater, provides coverage for items of exceptional value. This includes coverage for items that are lost, stolen or damaged, and it provides worldwide coverage. There are two ways to protect your valuables: a blanket policy or a scheduled agreement policy.
Blanket insurance provides coverage that is much broader than an individual policy. Essentially, it “blankets” multiple classes of valuable items under one policy with a single limit per class. However, this policy won’t necessarily insure your possessions to value. Therefore, it’s ideal for smaller items. For example, let’s say that you have a piece of jewelry that is valued at $30,000. You accidentally lose it and file a claim under your blanket coverage. Your insurance carrier will then conduct an appraisal of the piece, and replace it with a jeweler of their choice. This means that an item worth $30,000 could potentially be replaced for a lesser value, depending on the carrier’s appraisal process.
A scheduled or agreed value policy is also based on appraisals, but allows you to list out items individually. Appraisals of your valuables should be conducted every three to five years, more frequently if the item is worth $100,000 or more. Keep in mind that an appraisal is one person’s opinion of what an item is worth. That is why it’s important to have your items appraised by a qualified professional, and if you are appraising jewelry, it’s important to ensure that jeweler has a Graduate Diamond or Gemologist certification. Typically, your insurance company will choose whether to repair or replace your damaged or lost item at the jeweler of their choice, but the company may also give you the opportunity to choose the jeweler yourself or to simply keep the cash value of the item’s appraised value.
Other Helpful Tips
If you store your valuables in a safe place, such as a bank vault, coverage will be less expensive than if you are wearing the items on a daily basis or keeping the items on display in your home.
Also, be sure to update your home inventory to include items of exceptional value. Doing so can help expedite the claims process in the event you experience a loss. Include pictures and receipts, as well as any written descriptions and estimated values from the appraisal process. To download our free Home Inventory Guide, please visit www.mcgrathinsurance.com/resource-center.
Remember, reviewing your policies with an independent agent at least once a year will give you confidence in your insurance coverage year-round. And doing so after the holiday helps to ensure your valuables are being protected for their true worth.
Richard A. McGrath, CIC, LIA is President of the McGrath Insurance Agency, a division of Starkweather & Shepley Insurance, located in Sturbridge and Spencer, Mass. He can be reached at 508-347-6850 or at firstname.lastname@example.org.
This article is written for informational purposes only and should not be construed as providing legal advice.