Insurance Pro Tip #3 for Financial Advisors: Collections & Valuables
In the age of the internet, many might have expected “old-fashioned” hobbies like baseball card or vinyl record collecting to follow the way of dinosaurs. However, interestingly the pandemic has super-charged classic hobbies like bicycling, walking, and yes…card collecting. This means those items tucked away in your basements might be more valuable than it was even a year ago.
This is exactly what happened to an auctioneer last May. What he thought was a $500,000 baseball card, sold for $922,000. At the time, this set records for the sale of a modern trading card, but this same auctioneer has broken his record 7 times since then.
When you insure your personal belongings, your homeowners policy will typically cover these contents at 50-70% of your dwelling limit, or the total replacement cost of the home itself.However, it is important to know that unless collections or valuables are specifically mentioned in the policy (or in insurance jargon, “scheduled”) they may not be fully covered, as there are significant sub-limits that apply to these items. In other words, even if you have $200,000 in “contents” coverage, you may only have $250-$10,000 in coverage for coins or other specified items. We tell you this, because as an advisor, you can help your clients retain the maximum value of their assets by asking the following questions the next time you conduct a review with them:
1. Have your collections and valuables been appraised? If so, do you have the appraisal on file?
2. If you have an appraisal, how old is it? Specific items such as vintage movies, sports memorabilia, toys with a movie tie-in, and (believe it or not) old electronics, are often worth much more today than just one year ago.
3. Do you have clear pictures of the items that need special coverage (if they’re not already included with the appraisal)?
PRO TIP: It is always important to refer to your specific policy to make sure there are no coverage limitations for certain types of items. But for the purposes of insuring a collection (as opposed to valuables, such as jewelry, antiques, or furs) a fair bit of appraising work can be done by a savvy person with a bit of time to spend on the internet. There are many websites that give value ranges for collectibles—think “Kelley Blue Book for Beanie Babies”, for example. Creating a spreadsheet of the most important valuables in a collection offers the basis for an insurance estimate of the entire collection.
If you or your clients have any questions about insuring collections or valuables, we are happy to help you find solutions that will protect these keepsakes.