Don't forget to insure your Pez dispenser collection

Many homeowners fail to list hidden `treasures' such as family heirlooms

On The Money

Your Money

October 17, 2004|By Lorene Yue

Chances are when you bought that antique end table six months ago or picked up a painting at the art fair, you didn't call your insurance agent to update your home policy.

"A lot of people think, `I've got home insurance, and I'm protected,'" said Victoria Larson, an Allstate Corp. agent in suburban Chicago. "We take it for granted."

Most of us pay attention to home, condo or renter's insurance only when we get our renewal notice, move or hear about someone else's loss. While big-ticket items like a diamond ring or a fur may spur you to take out an additional policy, don't overlook seemingly everyday items.

"Everybody remembers their engagement ring, but they forget about heirloom pieces [of jewelry] from grandma," said Larson.

"Nobody loves to read their home policy, but they should [do it]," Larson said. "A lot of people don't realize how limited their coverage is."

There are two main parts to a home insurance policy - dwelling and personal contents. If you were to turn your house upside down and shake it, what falls out would be covered by the personal contents part of the policy.

The rest falls under dwelling coverage. Appliances would be personal contents, but cabinets would be part of the dwelling. Renter's insurance provides only personal contents coverage, since you don't own the dwelling.

For homeowners, personal coverage is likely a percentage of your dwelling coverage.

There are exceptions. Some items - jewelry, furs, computers - have limited coverage. If your policy covers up to $1,500 per piece of jewelry and up to $2,500 for the whole lot, and your $4,000 diamond ring and $2,000 watch get stolen, you'll only recoup $1,500 on one item and $1,000 for the other. That's when you'll want to consider an additional policy to provide adequate protection.

Supplemental policy prices vary by insurer and state. Getting $6,000 in jewelry insurance with no deductible will cost $57 a year in Maryland at State Farm Insurance Cos., said Troy King, a State Farm agent in Baltimore.

Take a good look at your stuff. Dig through your closets and storage spaces to see if there are any treasures hidden away.

Maybe it's your childhood collection of trading cards or comic books, or you've been acquiring crystal figurines.

Don't forget about china passed down from previous generations, silverware, Oriental rugs, sports equipment or your Pez dispenser collection.

Look at everything from a loss perspective: How much would you miss it, and would you spend the time and money to replace it?

Then estimate how much it would cost and see if your policy would cover that amount.

"It's hard for people to put a dollar amount on contents, but it's better to estimate high than low," King said. "I had a woman say that $50,000 wouldn't cover her clothes and shoes."

Certain items can appreciate in value, so update your policy every year to reflect the higher amount. Depreciation shouldn't be an issue if you opt for replacement coverage, which will allow you to get the same item at today's cost.

As a rule of thumb, Larson said, if it's valuable to you, you should consider getting a professional appraisal and then contact your insurance agent. That helps determine if you'll need an additional policy.

Appraisals aren't cheap, said Stephen Gass, who does them for Farmington Fine Arts in Avon, Conn. He charges $150 an hour and has seen rates as high as $400 an hour. He suggested checking price guides for a ballpark figure on your collection or using your purchase receipt to gauge the value of an item.

You'll want to get documentation - photos or video and written statement from a collectibles expert - so you can prove the value if it's destroyed or stolen. But if you have a particularly valuable or a unique item that is tough to evaluate, you might want to call in a professional.

Lorene Yue is a Your Money staff writer.

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