Got really nice stuff? Some of your special possessions, jewelry and other valuables covered under your homeowner policy may be severely underinsured, or even completely uninsured.
How can you insure jewelry and other valuables? Consider adding a personal articles floater (PAF) to your insurance policies.
A personal articles floater is, depending on the carrier, either a separate insurance policy or a supplemental rider added to your homeowner policy. A personal articles floater protects against loss, such as theft, and/or damage as a result of an accident to valuable personal effects.
Your current homeowners insurance policy may cover certain items such as jewelry, electronics, and other valuables, however, the amount of coverage is very limited. Depending on the item, the coverage may be anywhere from $500 to $2,500 and may include a deductible. Check your policy for exact limits.
What should be covered under a personal articles floater?
If you own any of the following, you may want to ask your insurance company about whether they are protected under your current homeowners insurance policy or if you need a personal articles floater:
- Artwork including paintings, statues, rugs, items of historical relevance, etc.
- Cameras & video equipment
- Personal computers & electronics
- Musical instruments
- Sporting equipment
- Stamps & Coin collection
- China, crystal & silverware
Why use a personal articles floater?
An item’s value is not the only consideration when determining whether to buy a personal articles floater policy. The type of peril to protect against should be considered, whether a stone falls out of your engagement or wedding ring or your computer is damaged in a flooded basement. These are damages typically covered under a personal articles floater policy versus a homeowner’s policy.
Depending on where you buy your policy, you can either itemize your valuable items on a separate personal articles floater policy or list your items on a blanket coverage. Insurance carriers have different requirements depending on the item(s) and respective value(s).
If you have appraisals for your valuables, the agent will be able to write a policy with items listed and covered on an agreed value based on the appraisal. Having an appraisal on a piece of artwork means that if you were to file a claim, you would be reimbursed for the appraised value.
If you don’t have appraisals but have some sort of proof of purchase, such as a receipt, the agent would be able to include the total of all items on a blanket coverage. However, the coverage is based on replacement cost or actual cash value versus agreed value. So you may not be covered for the full amount of what you paid for the actual lost piece.
Regarding “pair and set” coverage, which would be used for jewelry including earrings or an engagement ring and matching wedding band, the carrier will reimburse you for the full cost of the pair or set as long as you surrender the existing pieces you have in your possession to the carrier. In other words, if the policy reimburses you for the loss of one earring and you have to buy a pair to replace them, you have to surrender the other earring as part of the claim.
How to buy a personal articles floater
Follow these steps to make sure you’re buying the proper policy for insuring your jewelry and other valuables:
- List your valuables. If you have a collection of valuable items you would like to insure, provide a list of these items to your insurance agent. The list should include a description of each item and their appraised or purchased value. An appraisal is typically acceptable if it was done within the past 3 to 5 years. (But be sure to keep your appraisals updated if you’re considering switching policies.)
- Check your policy provisions for newly acquired property. What happens if you buy a new piece of artwork or jewelry after the policy is in place? Make sure you understand what you have to do to get it covered under your policy.
- Is there a deductible? Ask your agent if the personal articles floater has a deductible and if you can adjust the size of the deductible to minimize the premium cost.
- Keep photos or video of your valuable items in addition to appraisals and proof of purchase. You’ll need these in case you file a claim, so be sure you keep them in a safe deposit box or scan them and keep several electronic copies in different locations.
- Consider installing an alarm system in your home. Increased home security should translate into a discount on the premium.
- Can you store your jewelry and other valuables off-site? If the items can be placed in a bank safety deposit box, this will also qualify for a significant savings on the policy premium.
Remember, not everything you own needs to be under a personal articles floater policy. Just the really good stuff.
Linda Rey is a licensed insurance agent at Rey Insurance with a broad spectrum of expertise in life, accident, health, property, and casualty insurance, as well as retirement planning and college funding strategies. Follow her on Twitter: @ReyInsurance
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