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Insuring your collectibles

Shawn Chaulk's office doubles as a Wayne Gretzky museum.

Included in his shrine to The Great One is the jersey that the hockey legend wore when he tallied his 500th goal and the sweater No. 99 donned when he broke Phil Esposito's record for most goals in a season.

The Fort McMurray, Alta., resident's collection -- which also includes helmets, sticks and gloves -- is so impressive that even Gretzky's jaw dropped when he viewed it in September.

Chaulk's items are worth tens of thousands of dollars, so it's surprising to learn that he doesn't have insurance for his collection.

"Years ago, I looked into it and at the time what it would cost in premiums was outrageous," he says. "And the other thing is when you're an active collector, you're continually changing your inventory, so updating your policy is a full-time job."

But Chaulk does worry about something happening to his collection.

"A house fire can happen to anybody and if that happens, it's gone," he says.

So what are the options if you have a collection like Chaulk's? How can you insure your collection properly and affordably?

Create an inventory
Before approaching an insurer, you should create an inventory that lists the date you bought each item, the purchase price and its current value.

Marlene Landry, manager of consumer and industry relations in Atlantic Canada for the Insurance Bureau of Canada, says some companies will accept values from a price guide, while others insist on professional appraisals.

Toronto-based Allan Stitt, who owns a museum-worthy collection of NHL contracts, jerseys and hockey sticks, assigns values based on auction results and hasn't been asked for an appraisal by his insurer.

"It's a balancing act because I don't have an incentive to be either high or low," explains Stitt. "Because the higher I am, the more I'll pay in insurance, but the more I'll get if something happens."

Paul Johnstone, senior vice president, personal insurance, at the Chubb Insurance Company of Canada, says his company only requires an appraisal if the item's value exceeds a defined threshold. For example, a coin worth more than $50,000 necessitates an appraisal.

Approaching a broker or agent
Once you've established your collection's worth, you need to determine if that value is more than what's covered in your homeowners policy.

"On the standard homeowners policy, there will be coverage for collections, but there will be a limited amount," explains Peter Burns, president of the Insurance Brokers Association of Ontario. "Most comprehensive homeowners policies will cover you for up to $6,000."

If the value of your collection exceeds this limit, Burns recommends approaching an insurance broker who will shop the market to find you the appropriate coverage.

Insurance options
One option for insuring your collection is a personal articles rider. A rider provides more extensive coverage than a homeowners policy. For example, a rider would generally cover "mysterious disappearance," says Landry. An example of "mysterious disappearance" would be if a stone fell out of a ring in your jewelry collection but you don't know when it fell out.

With a rider, the onus is on the collector to update the value of their items. Landry says if you experience a loss that's covered under a rider, your insurer will only pay you the value that they have on file.

Stitt says the annual payment for his rider works out to about one per cent of his collection's value.

Valuable Articles policy
Johnstone says that Chubb offers collectors a Valuable Articles policy that has no deductible. One of the perks of this policy is that items are insured worldwide, which gives clients the opportunity to enjoy their collections anywhere.

The policy also provides a level of insurance for "newly acquired" purchases for 90 days before a collector must report them to their insurer.

A collector can also select "blanket" coverage for their less expensive items. For example, if a collector has 50 hockey jerseys ranging in value from $1,000 to $10,000, Johnstone says it wouldn't be necessary for them to inventory every jersey.

"What they might say is that I'm going to buy a ‘blanket' for those jerseys of $100,000 -- with a maximum limit of $10,000 for any one jersey," he explains.

Johnstone can't provide a ballpark cost for a Valuable Articles policy because it varies according to each person's collection and needs.

So there areoptions to insure a collection like Chaulk's, but the hardcore Gretzky fan is correct when he says that he'd have to update his policy regularly.

"The insurance is really for peace of mind," says Debbie Thompson, director of business development for Beyond Insurance Brokers in Whitby, Ont. "You've worked hard to collect these items. Why not work just as hard to ensure that they are insured properly?"

Kevin Glew is a writer in London, Ont.

-- Posted: Jan. 9, 2012
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