What is rare item insurance?

Insurance for rare items covers elements that make life more enjoyable and exciting, such as fine arts, musical instruments, sports memorabilia, and wine collections.

Definition and Examples

A standard homeowners insurance policy includes personal property coverage, which covers a wide range of items, including clothing, electronics, and furniture, in the event they are destroyed due to a covered loss such as fire. Typically, the coverage amount for personal property is a percentage of your dwelling coverage (usually ranging between 50% to 70%). If your policy protects the dwelling for $200,000, it will typically include between $100,000 to $140,000 as coverage for personal property.

However, most insurance companies limit the amount they will pay to repair or replace certain types of personal property. For example, a provider might pay up to $1,500 for stolen jewelry or $2,500 for silverware or firearms. The value of collections like fine arts, model trains, stamps, and wine often exceeds the limits of a standard homeowners insurance policy. So how can you cover your valuable collection? There are two ways.

Scheduled Property Coverage

Scheduled property coverage is an add-on to your policy that allows you to increase the coverage amount for a specific item, such as a rare illustrated book. To add scheduled property coverage, you may need to provide documentation such as an appraisal, photographs, and proof of ownership like a receipt.

Insuring your valuable collection with scheduled property coverage will increase your insurance value, but broader coverage may be worth it. For instance, if you lose a rare coin while traveling to a trade show, your standard homeowners policy will not cover it, but scheduled property coverage will. Many large companies, including Allstate, American Family, and Grange, offer scheduled property coverage.

Independent Rare Items Insurance

You can also choose a standalone insurance policy for rare items. Rare items insurance is designed to protect your treasures and can provide broader coverage than scheduled property coverage. You can purchase rare items insurance for almost any type of collection, including:

• Antique rugs and carpets
• Books and maps
• Collectible stamps
• Illustrated books
• Dolls
• Fine arts
• Firearms
• Jewelry
• Model trains
• Musical instruments
• Pottery, rocks, and minerals
• Sports memorabilia
• Toys
• Classic cameras
• Wine

How Rare Items Insurance Works

Rare items insurance offers benefits that are incomparable to standard homeowners insurance and scheduled property coverage.

Agreed Value

Some insurance companies that sell rare items insurance offer agreed value coverage, which is different from the actual cash value used by most standard homeowners insurance policies for damaged or destroyed personal property. Agreed value coverage pays a specific amount that you and the insurance company agree upon when purchasing the policy. The agreed value is based on the condition of the items, their unique features, the rarity of the collection, and industry guidelines.

Note: Because you are insuring a rare item, which theoretically will increase in value over time, most insurance companies do not depreciate the agreed amount based on wear and tear.

Automatic Coverage for New Rare Items

Some rare items insurance policies feature automatic coverage for items you add to your collection. For example, if you purchase a new painting for $900, your policy will cover that painting from the moment you complete the transaction. Insurance companies typically set limits for automatic coverage. For instance, your policy may automatically cover up to $2,000 for acquiring new items.

Automatic coverage from traditional insurance companies usually ends after 30-90 days from the date of purchase, so make sure to formally add it to your policy within that timeframe. However, specialized insurance companies covering rare items may not have a time limit for coverage on items automatically added to your policy. Be sure to know your coverage terms before adding them to your collection.

Coverage

Wider Coverage

Rare item insurance policies generally provide broader coverage than personal property coverage in homeowners insurance. For example, a rare item insurance policy may pay for lost items and cover losses caused by floods and natural disasters. Some rare item insurance policies may also cover items that are damaged or lost during transportation, which is a valuable feature when traveling to trade shows or purchasing new items online. Some insurance companies may also offer optional coverage that protects rare items stored in public storage facilities.

Claims Process

The claims process for rare item insurance is usually similar to the homeowners insurance claims process, but it can vary from one company to another. Some providers may require you to contact your agent or a claims hotline to file a claim, while others offer online claim submission. When filing a claim, you typically need to provide details about the damaged property, such as when and where the loss occurred, how it happened, and which items in your collection were affected. Your insurance provider will likely also ask you to provide photographs of the damaged items.

Note: Before purchasing an insurance policy, it’s a good idea to document each piece in your collection by providing both paper and digital copies of purchase receipts and taking photos and videos.

How Much Does Rare Item Insurance Cost?

Rare item insurance is relatively inexpensive, but the annual premium can depend on the type of rare items you are insuring. We requested quotes from three popular insurance companies for three different collections and received a range of prices for annual premiums that provide $20,000 coverage with a $500 deductible.

Factors Affecting Premiums

Some aspects of your home, your financial history, and how you store your collection affect how much you pay for rare item insurance. The following questions about storage are part of the insurance application with MiniCo:

• Do you store rare items in a basement?
• Is the home where the rare items are stored equipped with main door locks and alarm systems that report to a central station?
• Are the rare items stored in a home that is more than 1,000 feet from a fire hydrant?
• What is the age of your home and what type of construction is it?
• Do you keep the rare items in an area that is considered a flood zone by the National Flood Insurance Program?

Many rare item insurance companies offer policies with no deductible, so raising the deductible to a reasonable level can reduce the annual premium. You may pay more for rare item insurance if you have filed a rare item insurance claim or homeowners insurance claim in the past five years or have filed for bankruptcy. If you already have an insurance policy for your apartment, home, or renter’s insurance, speak with your agent about adding rare item insurance to your coverage. Some insurance companies provide rare item insurance as add-ons or have partnerships with leading rare item insurance providers. If you can add rare item coverage to your existing policy, you may get a better rate.

Do I Need Rare Item Insurance?

If you have a collection that exceeds the personal property limits of your homeowners policy, you likely need rare item insurance. Even if your rare items do not exceed coverage limits, most standard homeowners insurance policies only pay the actual cash value of damaged property, not the collector’s value.

Moreover, rare item insurance typically offers broader coverage than most standard homeowners insurance policies.

Takeaway

• Homeowners insurance policies set a limit on the amount paid for certain types of personal property, including some rare items.
• Rare item insurance provides

Many insurance companies offer scheduled property coverage or insurance for rare items that you can add to your existing home policy.

• Rare item insurance provides broader protection for items that have been damaged due to earthquakes, floods, or during transportation.
• Rare item insurance is often considered inexpensive, but the cost can vary depending on the type of collection.

Source: https://www.thebalancemoney.com/what-is-collectibles-insurance-5116168