The holiday season is upon us, and ‘tis the season to review your homeowners insurance policy. You’ve probably received some nice gifts from family and friends, and it’s important to be sure that your new and valuable items—such as jewelry, furs, antiques, fine arts, and other special collections—are properly insured.
While your homeowners insurance may cover certain risks, it may be time to shop for insurance that will cover your more valuable items.
Don’t count on your homeowners insurance policy
Your homeowners policy may have limited built-in coverage to cover your valuables against specific perils, usually on a lump sum basis and with a per item limit.
There are limitations to this coverage: It’s usually not all-risk (which covers you in situations such as mysterious disappearances or accidental loss of an item), and it’s usually not worldwide coverage. In addition, the coverage is generally not based on the replacement cost of the item and is subject to your deductible.
Policy provisions are different in each state and with each insurance company, so contact your agent for more detailed information.
How to choose an insurance policy that covers your valuables
If the limited coverage on your homeowners policy does not offer enough protection for you, consider purchasing a personal articles floater policy (PAF). This policy will allow you to schedule each valuable item and offer a specific limit to that item. The coverage will be worldwide and all-risk. It won’t be subject to any deductible, and it can provide replacement, repair, or cash-out options.
Take the following five steps when insuring your valuables:
1. Provide your agent with an appraisal from the store or dealer that sold you the item. This document will highlight the specific details of the item and will certify its value. The insurance company will use this value to calculate the amount of coverage and the premium you will pay to have this item insured.
2. Be sure that your PAF policy will reimburse you for the stated amount. This will ensure that if you file a claim, you will receive the entire scheduled limit listed on your policy without any negotiations. Without this added benefit, the insurance company can pay you less than the limit listed on your policy if it finds a retail store that has this item or a similar one for less.
3. Check with your agent about automatic coverage increases. Some PAF policies offer automatic coverage increases on every renewal to keep up with rising costs. These automatic increases mean you don’t need to get items re-appraised every year and you don’t need to worry about whether you have adequate protection.
4. Remember that your insurance may not kick in right away. For higher priced valuables—typically items valued at more than $25,000— your insurance company may need a few days to bind this coverage as the underwriting process may be more detailed and challenging.
5. If having an item appraised is impossible, ask your agent if you can add a blanket valuable items rider. This is a quick way to get some added coverage for your valuables. You will have all-risk, worldwide coverage with no deductible, but you may have a per item limit.
There will be a blanket limit for each class of item (such as jewelry, furs, and fine arts), and no specific item will be scheduled. If an item is lost, you will have to provide documentation that shows what you paid for the item and where you purchased it so that the insurance company can negotiate a value. You also may be required to provide a photograph of the item.
What to do once your PAF policy is in place
You should carefully review your PAF policy at least every three years, as the value of your items may have changed. For example, the value of gold usually increases over time, so you may want to get your jewelry re-appraised and have the limits adjusted on your policy. On the other hand, the value of a fur coat tends to decrease based on the marketplace and economy, so a re-appraisal can prevent you from over-insuring items like this.
While reviewing your PAF policy, you may also find that you’ve given certain items away to friends or family, so these items need to be deleted from your policy.
As always, contact your insurance representative to be sure your valuables have the coverage you need.
Heidi Petschauer Fox graduated from St. John’s University in Queens, N.Y., in 1983 with a B.S. in management. She joined her late father’s firm, Petschauer Insurance, in 1982, became principal in 1995, and now shares ownership with her partner and cousin, Erwin Petschauer. She received her Certified Insurance Counselor (CIC) designation in 1997. She currently facilitates the professional and creative development of the entire Petschauer team and manages the personal lines and social media departments.