Collectibles insurance for your treasures?

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Many of us have stuff we’ve collected and consider treasures, from Lionel train sets and salt and pepper shakers to rare photos and books. Your collection may even be quite valuable. Home insurance may not protect your trove in the same way a special collectibles insurance policy will.

Homeowners coverage for personal property is designed to cover items such as clothing, kitchen utensils, furniture and wall decorations, says Dan Walker, a representative with Collectibles Insurance Services in Hunt Valley, Md.

“There is usually little or no coverage left over for collectibles,” he says. “And homeowners policies sometimes severely limit or exclude some or all collectibles.” Insurance specialized for collectibles can offer more protection for your cherished items.

How collectibles insurance is different

Collectibles insurance is similar to the home insurance riders that provide extra coverage for jewelry, art and other valuables. Plus, the policies take into account the special risks to collectibles.

Let’s say your collection of Hummel figurines sits on a bookshelf that collapses, and the little porcelain figures shatter. Your home insurance covers perils such as fire, wind and lightning — but not a crashing bookshelf, says State Farm agent Larry Hill in Greenwood Village, Colo.

Collectibles insurance would pay for that accidental breakage because those policies cover a broader range of dangers and mishaps. And unlike home insurance, collectibles insurance often doesn’t require you to pay a deductible when you make a claim, though you can opt for a deductible to save on coverage for pricier items.

Buying collectibles insurance

The cost of a collectibles insurance policy can range from $40 a year on a $4,000 baseball card collection to thousands of dollars annually on far more valuable things, Hill says.

Before buying the special coverage, the first and probably toughest step toward protecting your collection is determining its value.

“Collectibles markets are just like every other market — they are driven by supply and demand, and fad and fashion,” says Kathryn Smiley, editor of Firsts: The Book Collector’s Magazine, in Tucson, Ariz.

Her own first edition of “To Kill a Mockingbird” cost $3.95 when it was published in 1960. She turned down an offer of $12,000 on it 10 years ago and says it’s now valued at $25,000.

But not all collectibles appreciate in value. Collectors who paid $1,000 in the 1990s for what was, at the time, a particularly hot Beanie Babies stuffed animal might find the same toy is now valued at just $10 to $15, says collector and appraiser Jeremy Rowe in Mesa, Ariz.

“Manufactured collectibles have artificial value,” he says. “Values drop after a while when they become more realistic than the ‘fantasy value.'”

Determining values

Rowe owns photographic postcards and other antique photos that have risen dramatically in value. Some he purchased for $10 to $30 years ago now fetch $300 to $500. And he has turned down an offer of $4,000 for a stereographic card from the 1800s.

Serious collectors generally know their possessions’ values through clubs, eBay listings, auction house sales, specialty magazines and dealers.

Appraisers can evaluate collections, but it’s often tougher than you’d think, says David Hall, owner of National Book Auctions in Ithaca, N.Y.

“You can become an expert on Hummel figurines in an hour on eBay,” he says. “But the more unique the item, the less data there is.”

The trick to appraising

For $150 an hour, Hall will scour sales and the Internet to determine an item’s value. But the trick is to find collectibles similar to yours. And just because something is very old doesn’t mean it’s valuable, he says.

You might think a theology book from the 1600s could be worth a lot. But it may sell for only $200 because the books are surprisingly common. A signed novel by Stephen King — a rarity — has far more value, Hall says.

Some insurers want appraisals, some don’t. At State Farm, collectibles valued at less than $5,000, which don’t include precious stones such as diamonds, get a pass, says Hill.

Allstate wants an appraisal or bill of sale for new customers, regardless of the value of their collector’s items, says Laurie Pellouchoud, a vice president with Allstate Insurance.

You should periodically re-evaluate the value of your collection. Collectibles Insurance Services offers an optional automatic 1 percent monthly coverage increase to adjust for inflation. State Farm offers annual inflation adjustments.

How claims are paid

How much you’ll be paid on a claim under collectibles insurance varies.

For example, there’s “agreed value,” which means underwriters bind the insurance coverage based on your description of your collection and what you say it’s worth — though they evaluate your application, of course.

“At less than $5,000, the level of risk is such that we’ll take your word for it,” says Hill. But put a $10,000 item on your list, and the company will want more documentation.

Collectibles Insurance Services, on the other hand, goes by market value — what the company determines it would cost at the time and place of the loss to acquire similar items, Walker says.

How you store your collection affects pricing, too. If you have an alarm system and a safe, count on a discount on your collectibles insurance premium, says Hill.