Insurance - Tips from an AgentAbout collecting ...
UNDERSTANDING DIFFERENT POLICIES
As your collection grows, it is a good idea to consider how best to insure it. Like any objects, collectibles can get damaged and be destroyed so you need to protect yourself from a potential loss and insurance is a good start.A relatively small collection is usually not a problem under a typical homeowner's policy; however, any collection can be viewed as more than a hobby if it reaches a size or falls into a category where the insurance company views it as more than 'items normal and incidental to a normal household.' A hobby can be viewed as a business, even if you have never sold a piece, simply because the potential to some day make money from it exists.
The best person to consult with regarding this subject is your insurance agent. She/he may initially recommend scheduling your collectible items onto your policy, which simply means they are insured separately under a 'floater' from the items listed as unscheduled personal property in your policy. If you don't schedule your items, at least make sure you have a replacement cost endorsement so you will not have depreciation taken you may not be able to recoup after a loss.
If you are a consultant or dealer, it will be necessary to have a separate business policy since your homeowner's has a limit on the amount paid for business property. Your agent will be able to advise you on the best package for covering your business risk. He/she can also explain liability coverage because in today's legal climate, even casual statements about potential resale possibilities or product durability can come back to haunt salespeople. Many consultants have secured professional liability coverage to provide for defense if they find themselves in court.
WHAT TO PROVIDE TO YOUR AGENT
Ask your agent what information your policy requires. At minimum, you will want to keep a list of the items you own, noting details such as item, type, year, unique characteristics (signatures, rare features), condition, original cost and current market value. Ideally, photographs or videos in duplicate of each item is always helpful but may or may not be required by your insurance company. Keeping a set of the photos/videos at a location other than your house is always a good idea, i.e., give the duplicates to your agent to keep in your file.
IN CASE OF DAMAGE
If your home ever suffers smoke and/or fire damage, do not clean your items with normal household cleaners, especially baskets. Smoke has toxic chemicals that not only soil the items, but interact with them chemically. It is necessary for items to be cleaned professionally and the sooner the better because after 24 hours, damage begins to get substantially worse. Be sure to take pictures or video of the damage before doing anything towards clean-up.
A call to your agent prior to doing anything is always helpful as they can advise you on who to call because he/she probably knows cleaning contractors who specialize in fire and smoke damage restoration. But if the process is stalled in paperwork, it is your right to do what is necessary to keep your items from being damaged further. Your insurance adjustor should not be upset if you have accrued reasonable expenses to protect your items from further damage before she/he is able to inspect the loss. You will have saved them the cost of replacing them or at least improved their salvage value somewhat, even if they will not clean completely.
In case of flood, it is important to get items out of the water as soon as you are able. What ruins baskets or boxes is SITTING in water for a great length of time. Baskets can be rinsed and set out to dry. Boxes may never fully recover, but water stains can be avoided by removing, rinsing and placing in a way to help them dry back into their original shape/form. Seeking the help of a professional is always advised.
THE CLAIM PROCESS
During the claim process, you will be assigned a 'claims adjustor' who will evaluate your loss as well as your current coverage as outlined in your policy. Everything is dependent on what type of policy you have, so it's always important and recommended that you review with your insurance agent what exactly happens in case of a claim.
When evaluating the damage, the items are usually classified as 'complete loss', or 'salvageable'. If salvageable, you will likely be compensated only for the cost to repair or clean the item (if possible) or for the partial value that is determined to be lost with the damage. For example, if a basket in mint condition is worth $100 but is determined that it can still be used even with smoke damage, a partial loss of $50 may be determined. In this case, one might be given $50 for the damage, plus the basket to continue to be used.
If the items are determined to be a complete loss and the policy has a 'replacement cost' endorsement, the insurance company has a couple of options. They can either settle with you for the value assigned to the basket, or choose to enter the secondary market to locate the exact item as a replacement for your loss. This is why it is so important to document the details of your item, including a market value. If they choose to go to the market for a replacement item, it is your responsibility to educate them what features your items had that may not be easily replaceable, such as signatures or other hard to find features. If they decide to settle on a market value, it will be your responsibility to document and defend the value you have associated for your piece. It is unrealistic to expect the high value for an item unless you can document why your item is worth more than the average item in the market. Most adjustors work off the idea of depreciation, so it is important to have all your information organized and ready to provide to defend your values. In most cases, claims are settled using the low or average values documented for an item. Understand that this part of the process is a negotiation, so be prepared for the back-and-forth conversations and don't get discouraged. You do have the opportunity to appeal a claim if you do not feel the settlement was fair. Unfortunately, in many cases, your insurance agent may not be your best advocate in the process as most agents are employees of the insurance company and act accordingly. It may be necessary to secure the services of a lawyer who will advocate for you.
If your policy does not have the 'replacement cost' endorsement, than your claim will be settled for whatever value assigned on the policy. For example, most standard homeowner's policy have something like $250-$500 assigned for collectibles. If you believe your collection is worth more than this automatic endorsement, it is your responsibility to share that concern with your insurance agent and discuss the best solution BEFORE anything should happen.