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Beetle Juice, Insurance, and Unintended Consequences

turkishrug.jpgJust as all legislation produces unintended consequences, so do the things we purchase. It is a universal truth you can bank on.

For example, take my new purchase of some Turkish rugs for my office. They are hand woven and died with natural colors. My favorite is the burgundy and gold carpet that is colored with saffron and some type of red beetle juice. Okay, not an appetizing thought, but I’m walking on the carpet, not eating it.

Being a good steward, I called my insurance agent and had the new rugs scheduled on our fire insurance policy. Scheduling expensive personal items is important, because you may want broader coverage for them or they may exceed the personal-property limits of your business or homeowner policy.

As a result of scheduling my rugs, I decided to review my homeowner’s policy. I discovered that a number of recent art purchases were not scheduled. Neither were my boyhood collections of stamps and baseball cards.

A call to my insurance agent reminded me why. Premiums on scheduled items, especially collections such as stamps, sports cards, or coins, are expensive. I was quoted a rate of $1.44 per hundred dollars of insurance. That is about 1.5% a year of the value of the collectible. When I considered that some of my collections had actually declined in value over the past 10 to 20 years, paying such a relatively high premium only added insult to injury.

Doing what every wired 50-something now does, I Googled “collectible insurance” and found several companies that specialize in insuring collections. Before you buy from one of these companies, make sure it is licensed to operate in your state, find out as much as you can about it, and read the policy carefully.

The company I chose was Collectibles Insurance Agency from Hunt Valley, Maryland (www.collectinsure.com). It is an agency specializing in insurance for collectibles of all types, including unusual collections like arrowheads, limited edition lithographs, mineral specimens, and ephemera.

Their policy offers replacement coverage, meaning the company will replace the item with a similar type and value as the original item. You can elect coverage that is increased at 1% per month, not compounded. Burglary coverage is limited to $60,000 unless the collection is protected by a central station alarm or approved safe or bank deposit box.

Some other insured coverage includes mail and shipping, travel, exhibition, storage facility, and property of others. Excluded losses include wear and tear from dampness or extremes of temperature other than fire, infestation by insects, birds, and other animals (although cats are covered!).

The premium for $20,000 of coverage (assuming no alarm system or safe) costs $88 plus a $15 policy fee, for a total of $103. That’s $.51 per hundred, or one-third the cost of such coverage through my homeowner’s policy. Their policy is underwritten by the Hartford Insurance Company, rated an A+ by AM Best.

While they don’t require an inventory or appraisal on individual items worth under $5,000, you still need to have your own inventory to prove a loss. And therein lies the unintended consequence of my trip into scheduled coverage.

I was one of the fortunate kids whose mother did not throw out his baseball card collection. I have thousands of baseballcardcollection.jpg1960’s vintage baseball cards—uninventoried—in a bank deposit box. I have long forgotten what I had, and of course, have no idea of the current value of the collection. Thus, I have embarked on what appears to be a summer project of cataloguing, grading, and pricing long-forgotten visages of Mickey Mantle, Willie Mays, and Roberto Clemente.

Enough for this week, I’ve got to get back to cataloguing.

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