How to insure your expensive possessions

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Maybe it’s your first foray into the art world hanging on the wall or a 50th wedding anniversary surprise glittering around your neck. Or perhaps your most-valuable possession is the biggest HDTV ever to loom over a living room, complete with $10,000 sound system. If it’s in your home, it’s covered by homeowners insurance, right?

Not necessarily. If your first move after bringing home your treasure didn’t include calling your insurance agent, get moving. The last thing you want to think about is life without the newest object of your affections.

Protect yourself by getting it on your homeowners or renters policy, advises the nonprofit
Insurance Information Institute, a consumer information service funded by the property and casualty insurance business. Your most expensive possessions are at the greatest risk.

Standard policies max out early
“People think their renters or homeowners insurance will cover them for any loss, and it just isn’t true,” says Loretta Worters, spokeswoman for the Insurance Information Institute.

“If you have a high-value item, you should be sure your insurer knows about it, has an accurate idea of its value and has listed it on your policy.”

Standard insurance policies for homeowners and renters do cover personal items such as jewelry, furs, stamp collections, rare coins or bundles of cash.

They protect cameras as well as antiques, silver or art works, but normally not for the total value. Most standard policies will only pay out $1,000 to $2,000 total on such a loss.

The answer, say experts, is to buy extra coverage from your insurer.

Called an endorsement or a floater, the added insurance is specifically for that diamond tennis bracelet, gold wristwatch or valuable collection of baseball cards, rare coins or butterflies, which must be listed and described.

“We advise people that any item worth more than $1,000 to $2,000 should be added as an endorsement on their homeowners policy,” says Worters. You might have to pay extra, maybe a few hundred dollars a year for a very valuable item, but the peace of mind in knowing you will be properly reimbursed if you lose your treasured possession is well worth it.

In most cases, you would also be covered for what insurance companies term “mysterious disappearance.” This means that if your ring falls off your finger or is lost, you would be financially protected.

Prices for floaters and endorsements vary depending on the type of jewelry, the insurance company, where you live and where the item will be kept. Keeping jewelry you don’t often wear in a safe-deposit box, for example, will result in a lower premium.

With floaters and endorsements, there are no deductibles.

So your sweetie has splurged and bought you a mink or a 10-carat ring. How can you protect yourself?

  • Photograph it, as a clear and permanent record of just what it is and what condition it’s in.
  • Obtain a copy of the store receipt, as demonstrable proof of its retail value.
  • Get it appraised by an expert. “The appraisal is the most vital step,” says Worters. It’s a document that establishes its value, that it was genuine and that it was in your possession at this time. A photograph is helpful, and so is a receipt, but the photo won’t show if it’s a real diamond or a fake. And what you paid for something in a store isn’t always exactly what it’s going to cost you to replace it.
  • Contact your insurance agent and arrange for it to be added to your list of possessions. Until you do that, you risk not getting the full value of your new treasure should it be lost, stolen or damaged.
  • Keep copies of the receipt, the appraisal and any video or photographs in your home inventory file or safe deposit box. You will need to send a copy of the store receipt and appraisal to your insurance agent, too. It’s also a good idea to keep an updated photo or visual record of your possessions, maybe by walking through the house with a video camera from time to time, so that in the event of, say, a disastrous fire, you’ll have a record of what you lost.