Insurance: My Oh My! What to Do?
To insure or not to insure? As appraisers we are asked that question on a fairly regular basis. The tangled and confusing web of information given by many insurance companies leaves clients thinking they understand all that is needed for making a sound and informed decision with regard to certain extras in the home such as art, jewelry, antiques, special collections and the ubiquitous gun. This understanding may continue and remain crystal clear until a claim is filed and the client finds the actual interpretation is very different from what they thought they understood, but didn't!
Replacement value on most insurance policies will cover claims in cases of fire and/or theft on most household items, but coins, jewelry, fine art, guns, sterling silver and gold coinage often have restricted or no coverage. Joy Estes, a Scottsdale area agent for State Farm Insurance, stated "Sterling silver, guns, appreciated value of coins and high end jewelry is usually not covered under a standard policy".
If your two guns, Grandmother's sterling silver flatware service for eight and a $20.00 gold piece were lost or stolen, the only item that might be covered under a standard policy is the gold piece and that would be for $20.00! Again the question is raised: "Is it worth the expense to insure the two guns and sterling flatware?" The gold piece should be kept in a bank safety deposit box, not in a home safe.
Estes also noted that if a collection and/or item(s) needed additional insurance, then it is important to know exactly what you have and what it is worth before a loss, not after. This is generally when an appraiser should be enlisted to provide an accurate and informed determination of value for those special items. A decision can then be made based on facts. She noted that "value of the heart" was not a sound reason to spend money on additional insurance for an item. Out of a random selection of one hundred policies, less than 20% had a rider and of those that do, 80% were for high end jewelry, not art or other items.
Another often played scenario is breakage. Most homeowners policies do not cover breakage. Estes said "a personal article policy" will cover almost everything, including up to $5000.00 in jewelry. The average cost for such a policy is an annual charge of approximately $2.80 for each $1000.00 to be insured. Again, you must ask yourself, "Is it worth the additional expense?" Would you pay for extra coverage to replace the various glass items if broken? That's a decision only you can make.
We are living in different times and must make decisions based on true value and importance to our daily living and safety. Home safes for jewelry, guns, coins and other precious items can be dangerous and bad for your health and well-being. In today's society, home break-ins happen when YOU are at home so YOU can open the safe! Safes can protect the honest and entice the opposite. Joy Estes recommends that valuables be stored in a safe deposit box at a bank rather than spend money on additional insurance. "Why risk the dangers of a home invasion?" How much is your stuff really worth?
If you have a substantial art collection, an appraisal is probably in order for the insurance rider, but if you have several pieces of decorative art that is valued at less than $10,000.00, then to insure is most likely a waste of money. Most decorative art will normally be covered in your standard policy.
To insure or not to insure is still the question? Life is a gamble and at times, it is best to gamble with the commonplace and not with the high end treasures. Revisit your insurance policy and chat with your insurance agent along with a trusted personal property appraiser who can help guide you in making a smart, objective and practical decision.