How do property insurance carriers insure collectibles?

If by collections, you mean prized collections such as baseball card collections, art work or rare coin collections, these are not sufficiently covered by a standard insurance policy, especially if these collections are very expensive and will be almost impossible to replace. You will need a separate policy to cover your collections.

One way of insuring collectibles is through a personal property floater. This floater will specifically name the items that you want to cover. Before the insurance company issues the policy, it will have your collection appraised and base the coverage amount (and premiums) on this appraised value.

When you are insuring your collection, you should:

• Make a list of the items in the collection
• Have photographs of these items
• Keep documents related to the collection such as receipts

When you suffer through a covered loss (such as fire or theft), you can file a claim with your insurance company. They will pay up to the maximum limit (or the appraised value) minus any deductible. Often, the insurance company will send an insurance adjuster to appraise your loss and may base the payment of the claim on this appraisal.

Here are some of the things that you should consider when you want to insure your collectibles:

• You should check what specific perils or risks are covered by the floater policy. It should include fire, theft, natural calamity (such as lightning, earthquake or flood), accidental breakage, coverage while the collection is in transit or being shipped, vandalism or water damage.
• Consider including an inflation protection rider. This will automatically increase the amount of your coverage every year to account for inflation.
• If you plan to add more to your collections, the insurance should cover the addition for a certain period, to give you time to list it as an addition to your policy.

The insurance company may issue either a purchase cost policy or a replacement cost coverage. With the first, you will be paid for how much you bought the item while for the second, you will be paid according to the current market value of the item.

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