COLECTIBLE INSURANCE ~ DEVISE A COMPLETE PLAN FOR ALL SITUATIONS

Despite the vulnerability to the value of collections of jewelry and art, many collectors spend little or no time protecting their investment versus the time spent with their highly managed stock and bond portfolios. Protecting precious collections means more than just listing it on an insurance policy with a value. If they insure their collections at all, they do just that and forget about it. Being certain the real value is protected involves trying to avoid loss in the first place, and then devising a plan to be reimbursed for today’s value in the marketplace in the event of an incident.
Protecting investments in collections requires a comprehensive approach, which includes an understanding of the collector, their items, and their buying and selling habits. Collectors and their advisors should determine which one or combination of the following approaches should be used to list the collection:
• Insure a group of items with a blanket limit, which can be helpful for someone with a large number of lower valued items. This gives flexibility in individual values and offers coverage for newly purchased items without adding each one.
• List each piece with a description and value, which works well for larger valued items recently valued.
• Maintain a schedule on record with the insurance agent or broker and updated periodically, often quarterly. This offers active collectors with large collections ease of administration by having the agent handle the coordination without having to add each item separately and receive a separate bill for each.
Once they are insured, some practices to help protect the collection’s integrity or value can include:
• Properly installing works away from working fireplaces, out of the way of pets and in rooms protected from UV light. Poor condition can cause significant decrease in value.
• Obtain current valuations from certified appraisers who know the type of works they are appraising. The market values of many collectibles have increased significantly more than capital markets in recent years.
• Use qualified and insured shippers to pack and transport pieces purchased in another city or being moved to another location. Shipping is the largest single source of loss to works of art form many insurers.
After determining how the collection will be listed, there should be a plan to be certain that the marketplace will not make the insurance program values outdated. There are plans that provide “appreciation” or potential increases if the marketplace prices increase above the current valuations.
There are other circumstances that should be understood and incorporated in a risk management plan. These may include shipments from auction or one home to another, loans to institutions, titling in other entities such as a trust or corporation, items in storage during construction or remodeling.
When it comes to collections of jewelry, art, or other collectibles circumstances are often as different as the items themselves. Protecting them properly depends on knowing the needs of the collector, having experienced advisors to help design solutions for their situation and knowing insurers whose specialty it is to comprehensively protect valuable collections.