- April 6, 2020
- Posted by: Admin
- Category: Insurance for High-Net Worth Consumers
Why You Should Add A High-Value Item Insurance Endorsement To Your Policy
Theft, floods, fires, natural disasters. These are all things many of us see on the news every day and yet most of us think they will never happen to us. But the truth is, none of us are safe from possibly experiencing one of these unexpected emergencies. That’s why proper insurance coverage isn’t something that we should view as a luxury, but rather a necessity.
It’s your responsibility to do your due diligence and make sure that you’re clear on exactly what your policy does and does not cover. Often, many people forget to dig deep into their insurance policies to find out whether their high-value items are covered and furthermore, what the limits of that coverage are.
Don’t make this costly mistake. In the event of a loss, damage, or theft, you might be left high and dry with no way to recoup the losses associated with your most prized and valuable possessions.
Looking to avoid this scenario? Here is everything you need to know about high-value item insurance so you can rest easy knowing you’ve covered all your bases!
Why Is High-Value Item Insurance Important?
Theft & Crime Statistics
It’s important to remember that none of us are immune from the possibility of having our property and personal belongings damaged or stolen. In fact, the unfortunate truth is that these occurrences are much more common than you might think!
Every year in the United States alone, there are between 2.3 and 2.6 million robberies. This means that, on average, a burglary occurs in the United States once every 23 seconds! Thieves are searching primarily for small and high-value items that can easily be sold or pawned. Items like jewelry and electronics are often highly targeted. According to reports by the FBI, the six most commonly stolen items are cash, jewelry, furs, vehicles, electronics, and firearms.
Although these facts are alarming, they are not the only factors you need to consider: crime and theft are only one type of scenario in which your property and personal belongings can be lost or damaged. From storm damage to fires, there are a number of other events and accidents that could cause a significant amount of damage to your home and your belongings. In 2018, in the United States alone, fire departments responded to fire alarms every 24 seconds.
Hopefully, these statistics have helped to convince you of the importance of insuring your belongings. But are you as protected as you think?
Many of our clients think that because they have a homeowner’s insurance policy, they don’t need to worry about seeking out any additional coverage. This is one of the most common misconceptions about insurance. With that in mind, let’s look at the limits of a typical homeowner’s insurance policy.
Limits of Homeowner’s Insurance Policy
So, you’ve purchased a home or signed a rental agreement and you have responsibly purchased homeowner’s or renter’s insurance. This is great news, you’re well on your way to peace of mind.
But it’s important to understand that there are limitations to the coverage afforded to you by your homeowner’s insurance policy. The first thing you need to know is that not all homeowner’s insurance policies are created equal. That is to say that you need to make sure you are aware of the specific limitations of your unique policy. There are, however, some standard elements that apply to most policies.
Let’s go over a few of these key factors and the important terminology you should understand in order to ensure you have a clear grasp of your homeowner’s insurance policy.
- Covered Incidents: Typically, homeowner’s insurance covers four types of incidents. These are— interior damage to your home, exterior damage to your home, loss or damage of personal assets or belongings, and injury or bodily harm that occurs while on the property.
- Deductibles: A deductible is an out-of-pocket expense that the insurance holder needs to pay for damage or loss that is covered under your homeowner’s insurance policy. This can blindside a lot of homeowners because they aren’t aware that their policy doesn’t cover the entire cost of the item that was lost or damaged. Make sure you have a clear understanding of your policy deductible.
- Limits of Liability: This is a crucial component of a homeowner’s insurance policy, especially for individuals who have high-value items they are looking to protect. Like deductibles, it is another component of a policy that can blindside those who don’t have a clear grasp of their policy limits. The liability limit is the maximum amount the insurance company will be required to pay a policyholder during a specific period of time. In order to determine how much insurance you’ll need it’s a good idea to consider the cost of a few ‘worst-case scenarios’ and reflect on how much risk you are willing to take on.
- Excluded Scenarios: There are a few scenarios that are typically excluded from insurance coverage on most homeowner’s policies. These scenarios fall under what is usually referred to as a Force Majeure clause. Under contract law, this typically covers natural disasters, acts of God and acts of war. If your property or belongings are damaged in a scenario that falls under this clause of your contract, your insurance company is not obligated to provide coverage.
These points illustrate that, contrary to popular belief, a basic homeowner’s policy doesn’t offer coverage for all scenarios that you might encounter. These gaps in coverage are often addressed by policy endorsements such as water back-up coverage endorsement, or high value-items endorsement. Your agent can advise you on how to close gaps in coverage that best fits your specific needs. For individuals with high-value items such as jewelry, artwork, antiques, memorabilia and other collectibles, it is especially important to ensure that you are aware of the relevant limits of your coverage in relation to these items. The good news is there are additional policy options that can provide further protection for these types of belongings. In the next section, we will cover the basics of insurance for high-value items.
How Does High-Value Item Insurance Work?
Usually, your insurance company will offer you the option of adding additional coverage to your policy. This is typically referred to as a policy endorsement. If you have high-value items or items that cannot be easily replaced it is worthwhile to invest in this type of additional insurance coverage. This is because this type of coverage will typically have fewer stipulations and limitations as well as lower or no deductibles.
For example, let’s say that you have a beautiful and expensive engagement ring and one day it mysteriously disappears. You have no idea if you lost it, if it was stolen, or if it fell off your finger and ended up in a drainpipe. With a typical homeowner’s insurance policy, due to the mysterious circumstances surrounding the loss of the ring, it is unlikely that you will receive any compensation. And even if you did it would likely not amount to the full value of the ring. In contrast, most high-value items endorsements would offer coverage for the full cost of the lost ring despite the mysterious circumstances as long as the item was scheduled or listed on the policy. As with homeowner’s insurance policies, every endorsement is unique so make sure that you have a thorough understanding of your available options for additional coverage.
How Do I Insure My High-Value Items?
Does this sound like the type of coverage you could benefit from? If you’re a collector of antiques, sports memorabilia or artwork or your own high-value items like jewelry or top-of-the-line electronics, it is likely that high-value item insurance is worth the investment. So how do you get started? Let’s look at what you need to do in order to ensure that your most precious and valuable belongings are properly protected.
Schedule Your Belongings
In order to protect the full value of your most expensive belongings, you’ll need to schedule them. Essentially, this means that you need to take an inventory of the belongings in your home and keep a record of all the relevant information that an insurance company will require in order to fulfill a claim.
To find out exactly what information you need to collect, it is best to speak with an experienced insurance agent about your unique policy and specific needs. Typically, insurance companies will require a complete inventory of the items under the coverage of the policy which includes photographs and original receipts or appraisal records. If the item in question is a collectible or an antique, you may also need to provide certification to prove the authenticity of the piece.
This may sound like a big job and, it’s true, it can be time-consuming; however, remember that you’ve spent a great deal of time, effort, and money to acquire these pieces in the first place. So, it’s worth spending the effort to protect your precious valuables. In addition, there are some useful apps that can help streamline this process considerably. Once you’ve completed your inventory make sure that you take the time to print out a few copies and place them in several different secure locations. This way if anything is lost, stolen or damaged, you’ll have additional copies.
It is unlikely that you will have access to original receipts for every high-value item that you wish to insure. This doesn’t mean that you won’t be able to seek additional coverage for these items; rather, it means that you will need to conduct an appraisal for each object in question. It is worthwhile to have an appraisal done for all your high-value items, especially if they are collectibles or antiques. Appraisals will give you an up-to-date evaluation of how much each item is worth. But before you conduct your appraisals make sure to talk to your insurance agent about the specific certifications that are required.
Just as it is a good idea to keep multiple copies of your home inventory, it is also a good idea to keep multiple copies of the appraisal certificates you receive. So, photocopy your certificates and place hard copies in different locations. Also keep an electronic copy as a back-up.
Update Your Policy Regularly
So, you’ve purchased a home or rented a space, you’ve obtained homeowner’s or renter’s insurance, you’ve done your due diligence and put effort into understanding the limits of your policy. You’ve then taken stock of the inventory in your home and purchased additional coverage for your high-value items. You’re all set, right? Well, not quite. Don’t fail to complete the final details required for putting proper coverage in place.
The last step you need to take in order to ensure your property and belongings are adequately protected is an ongoing one and it involves regularly updating your policy. As you add new high-value items to your home or collection, you’ll need to make sure that your policy reflects these additions. So, get into the habit of regularly reviewing your policy with an experienced professional and scheduling as well as appraising any new items. By getting into this routine, you’ll never be caught unaware.
There’s no question that in order to properly protect your valuable property and belongings you’ll need to put in some effort. However, it is always better to be safe than sorry. If you’re in need of support to understand the limitations of your current homeowner’s insurance policy or to add on additional valuable possessions insurance, Colby Insurance Group can help!
We give you the one-on-one attention you deserve. This way, you’ll be able to find the policy that fits your unique needs. Ready to finally gain a little peace of mind?
Get in touch with us today to find out how we can help.
Call 800-392-6532 or visit us at colby-group.com