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While your homeowners or renters insurance covers damage to most of your belongings, you may find it difficult to get the full value for your prized collectibles following a loss.
For example, if you own a first-edition Harry Potter and your house burns down, a general homeowners insurance policy will cover the book up to a certain sub-limit—the limit of payment the insurer will grant in a given category—like any other book, which likely isn't much. They will likely not cover the cost of a unique and highly valued first edition of an otherwise ordinary book.
So, if you have any extremely valuable books about boy wizards or other highly prized collectibles stashed in the attic, it may be time to add insurance for these collectibles to your policy. Here's how.
How Is Collectibles Insurance Different From Homeowners Insurance?
To start, collectibles insurance can come as a rider, also known as an endorsement, that's added to your existing policy and allows for more specific coverage. These riders can attach to an existing homeowners, renters, condo or mobile home insurance policy. You can also take out an independent collectibles policy.
To cover specific items under these types of policies, you may be required to schedule—or list to insure—items individually. This may require appraisals and documentation to help your insurer come to a reasonable level of coverage to protect your financial interests in case of loss of your collection. Collections under a certain value amount may not need detailed documentation.
This detailed documentation is where insurance for collectibles differs from policies like homeowners insurance. Insurance policies are based on actual cash value—the repair or replacement value minus depreciation—not market value, which may differ significantly for collectibles.
Another reason not to rely on homeowners insurance for coverage of expensive collectibles is the metrics used to determine payouts. Homeowners insurance policies may cap your compensation for belongings at a certain percentage of the value of your home, perhaps as low as half the value, possibly not leaving enough coverage for a valuable collection.
What Does Collectibles Insurance Cover?
Whether you're a stamp collector or bibliophile, collectibles insurance can most likely cover your items. The policies are designed to cover individual pieces that may have very complicated price histories. Collectibles insurance covers items such as:
- Trading cards
- Comic books
If you have an even more unique collection, talk to your agent. As long as the loss of the collection is valued above the provider's threshold cutoff, they may be able to insure it.
Whatever your chosen collectible, insurance can protect you against a variety of perils. Collectibles insurance kicks in for:
- Disappearance or loss
- Accidental breakage
There may still be limits on coverage for certain perils, such as a cutoff on the payout amount or no flood coverage in certain locations.
Plus, there are some things that the policy just may not cover. Situations that coverage may not extend to include:
- Items of extraordinary value: Some items need to be insured individually, particularly if their value would still exceed the sub-limits for a specific peril.
- General wear: Although condition is an important part of collectibles, you can't insure against the general wear and tear that comes with the use of collectibles.
- Items that have been loaned out: If you have loaned out a collection of Pokemon cards to an exhibit, it may not automatically be covered under your collectibles insurance unless specified in the policy.
- Inflated values that have not been reported: It's important to update your policy as the value of your collection increases to ensure that you have accurate coverage.
How Much Does Collectibles Insurance Cost?
Collectibles insurance is considered an affordable addition to a current policy, especially when you consider the risk you take of having to replace an item without it. Items can typically be insured for less than 1% of their value per year. So, if you have a $10,000 item, you may be able to get it covered for around $100 each year.
In addition to low premiums, policies may not have a deductible. Serious collectors are likely to find a policy that offers fair coverage to their collection for a comparatively low price.
Protect Your Valuables With Collectibles Insurance
If you have a collection that's more valuable than your homeowners policy would compensate you for, you may want to think about getting collectibles insurance.
Reach out to your insurance agent or the company that holds your homeowners or renters insurance policy to see if the policy can be added as a rider or separate coverage. Be prepared to offer detailed documents about the items within your collection or even hire an appraiser to get a sense of replacement costs for the item. Proper coverage for the items you've spent time collecting will give you peace of mind in the event that something happens to your collection.