Tuesday, October 4, 2011

How to Insure Valuables

Do you know how to insure your valuables? You would be no more than an average middle-class American, if you are joining the ever-mounting millions acquiring valuables as a way to insure and protect your dollar’s buying power – antiques, coins, gems, oriental rugs, paintings, stamps etc.

You would be no more than normally cautious if, as a result, you are on guard against fraud. As a beginner you try to study your specialty carefully; to do business only with reputable dealers, galleries, auction houses; to get an accurate appraisal of the collectible you’re considering before you buy; to establish the authenticity of the item to determine your insurance needs.

But despite all your caution, you still may discover – when it’s too late because you have been burglarized – that the insurance policies you thought were adequate are far too limited. Most homeowners’ and apartment dwellers’ policies, for instance, have special limits for valuables and insure against certain causes of loss – with maximum limits for theft.

If your valuables are destroyed by other covered causes of loss, fire for example, your claim would not be subject to these limits. You easily can solve the problem of low property insurance limits by extending your coverage via attaching a personal articles floater (PAF) to your basic policy.

The gain in benefits well may make the extra cost in premiums more than worthwhile. PAFs can insure your valuables, individual articles or entire collections against most hazards, up to a specified amount. Glass breakage also can be included for fragile items, such as porcelain or fine china.

Typical exclusions are: wear and tear, gradual deterioration, insect, pet and flood damage. Other exclusions include a particular type of property, such as stamp and coin collections. But PAFs have a wide range of benefits beyond the broadening of risks covered and the extended recovery limits.

As an illustration, PAFs establish the existence, ownership and market value of collectibles; they add an automatic 30-day coverage for new acquisitions to an already insured collection and this extension can apply to furs, jewelry, cameras, anything that might be covered by a floater policy.

Jewelry floaters often have a “pair and set” clause that covers a set or pair of valuables. Under this provision, if a single earring is lost, the one remaining can be turned over to the insurer who will reimburse the policyholder for both. Most personal possessions, including collectibles, are underinsured – but you won’t admit it until the “crunch” comes.

To prevent an underinsured loss, three basic precautions are essential:

1. Go over your collection and put a dollar value on it.

2. If you’re not sure, or think the value exceeds $1,000 (easy in this era, even with simple silverware), have an appraiser give you an estimate.

3. If the value of your collectables exceeds the limit of your policy, adjust your coverage for your own protection. Whether you own a Queen Anne side table, an 18th-century tollhouse or a modern silver service for 12, the basic point remains the same: A personal articles floater is the best way to insure valuables and collectibles.

This is hardly only a domestic problem. Theft of valuables has become a worldwide threat to owners. Only the sale of illicit drugs ranks higher as an international crime. The United States heads the list of hightheft countries. Last year, for instance, less than 5 percent of the art that had been stolen was recovered. This is why it’s very important to know how to insure your valuables.

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