Collectibles insurance is a type of property insurance that protects the value of your collection in the event of a covered loss. Collectibles are usually defined as any single piece with a resale value of at least $1,000, and which is not commonly used for personal or business purposes. They also tend to be items that you may fall in love with, rather than items you require for everyday use. The result is that many collectors don’t tend to think about insuring their collection. After all, what could possibly happen to your toy car or baseball card? It’s not like they’re a necessity or anything… Right? Unfortunately, the answer is almost always “Yes.” While it might seem like an unnecessary precaution, collectibles insurance can provide financial protection for your collection in many unexpected circumstances. Here we will explore some possible risks, how to identify them and why you need collectibles insurance to protect your investment:
What is included in a collectibles insurance policy?
A standard collectibles insurance policy will include coverage for the following items: – The value of your collection: If you are insuring only a few high-value pieces, you can expect to receive a lump-sum payment equal to their value in the event of a covered loss. However, if you are insuring the majority of your collection, you will be issued a check according to its total value. – The cost of repairing or replacing damaged pieces: If a piece in your collection is damaged, but remains otherwise functional, the insurance company will typically offer to repair it for free. If it is irreparable, they will replace it with another item of similar value. – The cost of repairing or replacing damaged display cases: If your display case is damaged by a covered loss, the insurance company will cover the cost of repairing or replacing it. Display cases are often overlooked when it comes to a loss, but they can be expensive to replace.
Losses Covered by Collectibles Insurance
Fire and Lightning : Fire is the most common cause of a covered loss for a collectibles collection. Because the cause of a fire is typically human error (such as faulty wiring or a cigarette carelessly tossed into a wastebasket), lightning is the most common cause of a lightning-related loss. The good news is that many types of collectibles are automatically covered against fire and lightning. Theft : It may seem obvious, but collectibles can be stolen, and the majority of theft claims are related to collectibles. Unfortunately, insurance companies will not cover the cost of the stolen item, but they will cover the cost of repairing or replacing damaged display cases and security measures. Water Damage : Water damage can occur in a variety of ways, such as a burst pipe in the home or a storm that causes rain to pour through a broken window pane. Fortunately, most homeowners policies will cover damage from external flooding, such as water seepage from a broken pipe.
Natural Disaster
Natural disasters, such as hurricanes, tornadoes and earthquakes, are typically not covered by a standard homeowners policy, but there are collectibles insurance policies that do cover these events. If a disaster occurs in your area, and it causes a covered loss to your collection, your insurance company will issue you a check for the value of your losses.
Costs Covers by Collectibles Insurance
As we alluded to earlier, the first and foremost reason to purchase a collectibles insurance policy is so that you don’t have to pay out of pocket if a covered loss occurs. However, there are other potential benefits to purchasing collectibles insurance, such as: – Building and maintaining your credit score: If you are financing the acquisition of a particularly valuable collection, you may be required to take out a loan. However, if you have a low credit score, the lender may require you to pay a large down payment or take out a larger loan with a much higher interest rate. – Protecting your family’s financial future: If you don’t have collectibles insurance, and a covered loss occurs, the only option left to you might be to sell your collection.
Conclusion
Ultimately, there are few guarantees in life, but one of them is that things will break, get stolen or otherwise be damaged. In such a scenario, your collectibles insurance policy will be there to bail you out. Regardless of how careful you are, or how low you buy your premiums, there’s always a chance that a covered loss will occur. That’s why you should make sure to keep your collectibles insured!
