Collections and insurance; what to think about?

Collections and insurance; what to think about?


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Like many people; You might have a collection of something, whether it's fine art or postage stamps. Probably you never thought about to insure of your collection, especially when your collection isn't very valuable or you just started collecting. I want to explain what to think about when you might consider to insure your collection, since I am thinking about insuring my collection. And I did discover a lot I didn't know.

How much is collection worth?

When you have a very small collection, it will fall under the terms of your household insurance. (This is a kind of insurance you get for all the objects in your house that can be removed without damaging the house itself.) However, most of the household insurances have a maximum amount they pay out in case of fire or theft (for example). The amount of pay out might look like a lot, but if you include the furniture of an average family house, there might be little to nothing left to insure your collection. For large and very valuable collections a household insurance isn't sufficient.

Replacement value, actual cash value, purchase value.

  • Replacement value is the value needed to replace an item with an exact same item (same condition, same age of product)
  • Actual cash value is the purchase value deducted with a certain amount of money each year. This is done to correct the value for the depreciation. Each year you own an item it's devalued in value, how much the depreciation will be depend on the useful life of a product.
  • Purchase value is the value/ price you paid for the item.

Special collectable insurances

There are collectable insurances you can use to insure your collections; ranging from fine art to jewelry. Downsides of these insurances is that you will have a 3th party, an appraiser, to value your collection. Hiring an appraiser can cost quite some money. Also the policy costs tend to be higher than a regular household insurance. Positive factors on this type of insurances is that you can insure your collection even outside the house. This might be useful if you take your collection to events. Also is damage better insured. Because the collection is valued by an appraiser you are insured for that value. So it's more likely you can actually replace the losses in your collection.

Since each insurance has its own policy conditions it's good to check these prior to making an insurance contract.

Every insurance comes with its price tag. It is up to you whether you want to insure your collection. Especially with a large, expensive collection it might be worth looking into, but in the end if you don't want it, it is your choice. However if you do decide to take an insurance, it is always wise to have a list of items you own and their value/price you paid for them; Also take lots of photos so you can prove that you had those items in your possession.

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