Protecting your valuables -- the cheap way
By Paul Bannister • Bankrate.com

You've spent 15 years collecting stamps, ceramic ladybugs, silver napkin rings and Native American memorabilia.

But just recently you realized they could be valuable, and your mind began churning.

What if you have a disastrous fire or a nasty burglary? Will your homeowners insurance cover the loss?

Suddenly, you're faced with a fast-expanding set of questions. At what point do I need to add my collectibles to my homeowners policy? Do I need a separate policy? What if I don't store them at home?

"There's no set time when you should go from homeowners policy coverage to a separate policy," says Danforth Walker, founder and chief executive of Collectibles Insurance Agency in Westminster, Md., which provides coverage to 16,000 collectors and 2,000 dealers nationwide.

"We find it best to assess your collectibles' value. If you have more than $3,000 worth of collectibles, it's time to get separate insurance for them."

Most homeowners policies, he explains, are set up to pay for losses to furniture, clothing and other household items. Collectibles are not necessarily covered.

You might have some coverage for the guns, stamps, antiques or other things you've collected, but most policies limit their payouts for those losses to between $500 and $2,000 if they are not specifically listed on a collectibles or fine arts floater, and insurers often have difficulty assessing replacement values for major collections even if they are listed. Consider also that as many as one in three collectors' losses occur outside the home, when goods are being transported, mailed, shipped or carried. In those situations, homeowners insurance coverage is not necessarily in place. Net result to the collector: an unrecompensed loss of valuables that can be extremely difficult, if not impossible, to replace.

Cheap protection
"We offer $3,000 worth of insurance on your collectibles for just $12 a year," says Walker, who has been insuring collections of everything from maps to medals for 38 years.

Specialist insurers, such as Collectibles Insurance Agency, concentrate their business on covering collectors and their collections and max out their rates at 38 cents per $100 of coverage -- considerably less than most homeowners insurance rates of 50 cents per $100. They also claim to offer better post-loss service.

"Specialist insurers like us give eBay customers -- a very sizeable portion of the collectors' market -- $10,000 worth of coverage for $29 a year, or $100,000 worth for $214 a year.

"We automatically increase coverage 1 percent each month to maintain the true value of the collection, as the increasing value of existing items along with new acquisitions boost the total value."

"Many nonspecialist insurers require periodic professional appraisals to maintain your insurance, which is an expensive hassle," says Walker. "Some even demand the collector list every item and keep the insurer updated on new acquisitions, as well as items disposed of.

Generally, specialist insurers allow the collector himself to establish the value of the collection, without need for a professional appraisal. Break down your collection into categories, advises Walker, then estimate the value of each sub-collection.

"If you collect U.S. stamps, for example, break the collection down into pre-1869 issues, 1869 to 1900, 1901 to 1937 and 1938 to the present. Then estimate what each sub-collection would realize at auction if the room were filled with specialist dealers and collectors."

You need only list individual items if they are worth more than $5,000. If you sustain a loss, insurers may call on their own experts to assess values of the lost items.

Housing the collection
If you don't store your collection at home, you might pay more -- or less.

Public storage facilities are rated as riskier places for your goods than your home, so expect to pay around 15 percent more. Storing your valuable collection in a bank vault makes insurers happy -- and brings down the cost considerably.