Collectors insurance

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Posted By: Jeff Obermeyer

Dan Mathewson posted in a previous thread about collectors insurance that he found online. Dan was nice enough to forward his sample policy to me for review, and I thought I'd let everyone know a little about the coverages provided.

DISCLAIMER: I am in no way affiliated with any company involved in this insurance. Also, I am not a lawyer, and cannot give legal advice. Finally, it is important to note that often two insurance companies will interpret identical policy language in two different ways. I am basing my analysis on my 3 years experience as a property claims adjuster for another carrier...

The coverage provided is indeed "all risk". This means that your items are insured for any and all perils, except those specifically included in the policy. There are a number of exclusions listed in the policy, with the first being the most important in my opinion. It is the "wear and tear" exclusion, which states that losses caused by fading, creasing, scratching, wear, tear, dampness, insects, etc. will not be covered. Also not covered is any damage that happens to your items while they are being handled - so if you drop an item or spill something on it or damage it in some other way, it's not covered.

Most of the other exclusions deal with damage caused while items are in transit, although my favorite exclusion is for damage caused by "any weapon of war employing atomic fission...".

Anther important note is that the policy will not pay out more than $10,000 on any one item.

One other important clause in the conditions section is that which deals with "other insurance". This policy is secondary to any other policy which may cover your collectibles. As an example, say that your homeowners policy provides $1,000 in coverage for trading cards. If your loss (to trading cards) is less than $1,000, then you would have to file a claim under your homeowners/renters insurance. If your loss is $5,000, then the collectors policy will only kick in once you have filed a claim against your homeowners policy and that policy has paid out it's limit. In this situation then your collectors policy would only cover the $4,000 of the loss not covered under the homeowners policy. In effect you have to file two claims for your items.

The policy is underwritten by Lloyd's of London. They use independent adjusters to handle their claims, and this can often slow the payment process considerably.

All items valued at over $2,500 have to be individually described/scheduled and documented. The deductible for the policy is $250, the maximum payable for one loss is $50,000. The value of your items is determined as: "Value means the replacement cost of the item or items; or if not replaceable, then the purchase price, or an appraised valuation by a competant authority."

There are some other mildly interesting tidbits, but I don't want to bore all of you with the details and fine print.

The policy is available through Association Insurance Administrators in Davidson, NC. 1-800-618-1787.

Jeff

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Posted By: Dan Mathewson

Jeff just gave you a really good outline of the coverage. Very cool, and: thanks Jeff, also, for pointing that stuff out to me, too. A layperson can always use a set of more skilled eyes when looking at legal docs.

The reason the polciy is great for me is:

1. My collection is not all in one place (which this policy allows...I can keep items at home, in my office, in a safe deposit box...) so I will likely never have more than $50,000 lost in one occurrence.

2. Apart form nuclear fission, atomic war, and a few other odd exclusions, I feel the all perils coverage is great.

3. The exclusion of "damage from handling, wear and tear, etc." (dropped cards, creases, etc.) doesn't bother me in the least. All my cards are graded/slabbed already for protection and cataloguing, and ease of handling. Any other handling (mail, UPS, etc.) I always do insured. I had one pay-out from damage through USPS already this year. They were slow, but very fair and equitable when considering market values of collectibles.

4. I have no other coverage (homeowners, etc.) that will include my cards, so I need this kind of coverage.

5. I sent them an entire catalogue of my collection from an Excel Spreadsheet. I already have that, so sending that list to them took about 2 seconds of my time. Also, when I get anything new, it's automatically covered as long as I advise them within 30 days of buying it.

6. Comparatively, it is VERY inexpensive. For $65K in coverage, I've had other quotes (not all-peril quotes) of around $1,000/year. This policy is costing me $201/year. I love it!

Bottom Line: I never want to use this, so I'm glad it's not too expensive. I can't think of one Mathewson item I'd ever sell for 10x it's market value. But, if "sh-- happens", at least I'm not out what I have expended on my collection. My pocketbook won't get hit, just my sentimental attachments to whatever I might have lost. And, that would suck enough without the financial loss, too.

So, for what it's worth, after what Jeff and I have told you, either of us can connect you with policy info if this appeals to you. Neither of us would want our friends doubly hurt by a collectible loss. This one seems to be a good solution, in my opinion.

-dan

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Posted By: Dan Mathewson

Some good news about the insurance. Remember earlier, Jeff pointed out one exclusion:

"Another important note is that the policy will not pay out more than $10,000 on any one item."

Well, this is for any item that the collector does NOT list on the schedule of items worth over $2500. According to Angie Becker at AIA (the underwriters in NC), that is only for items that the collector neglects to list on the schedule of items valued at over $2500. That's specifically why they have us make those schedules. The "will not pay out more than $10,000 on any one item" is for any item NOT listed on the schedule. I'm very glad I asked her about that and got that cleared up. This is just for anyone considering this insurance because, as I told Angie, many people will have cards and other items worth well over $10K. She totally agreed.

That made me very happy.