When considering the merits of insuring antiques its important to realize that every antique is unique. Insurance is one of those subjects that is easy to defer. It takes time, money and effort to obtain valuations on antiques, and anyway, they’re probably not worth all that much, and they’ll be covered on the home and contents policy – right?Well, not necessarily. Research in the UK reveals that forty percent of the population has inherited valuables, and one in five has inherited items with a value of more than $25,000. But only one-third will bother to have the heirlooms valued, and barely one in ten has adequate insurance for antiques or art. This behavior is not necessarily confined only to the UK.Clearly it’s important to get a proper insurance valuation for antiques and works of art, but for some reason people tend to value items that they have bought themselves as having more value than those that were inherited – and often mistakenly. If there’s not a proper insurance valuation, the money awarded by the insurance company may do little to replace the inherited Clarice Cliff vase that you thought was just a gaudy looking bit of tat.The value of antiques and art can fluctuate, and a valuation every decade or so is not a stupid idea. So what is needed when organizing a valuation? The most important things are:• A professional assessment.• Access to reference books that have accurate terms and descriptions that are universally used by professional antique dealers.If the description of a Victorian sideboard says simply that it is mahogany with two drawers and two cupboards, it could be worth anything from $1500 to $15,000.Quality, provenance and condition are all major considerations. In any case, most insurance companies will insist on a professional written valuation for items with a value over a certain amount.In general terms, the insurance valuation will probably be at least 20% higher than the current sale value. This might push the premium up, in which case a ‘market valuations’ can be requested, which is taken from auction prices. However, this method does run the risk of resulting in a pay out that is too low for a satisfactory replacement of the item.Why do people undervalue their antiques? Mainly to keep insurance premiums to a minimum. But in the insurance world all items are not equal, and a dresser valued at $20,000 will usually have a much lower premium than a ring of the same value, purely because it’s much harder to walk off with a dresser than with a ring.Under-insurers are also hoping that they will never be robbed, have a fire or be flooded. If that happens, following the devastation of losing heirlooms comes the reality that the owner can’t afford to replace everything. There’s also the school of thought in which the owner deliberately under-insures, and if the worst does happen they believe they will make up the difference themselves. The logic here is that the money saved in higher premiums will be available should a disaster occur. The problem here is that if home contents are insured for $50,000, for example, when it is known are worth $100,000, it may be found that the insurers, who will also be aware of the under insurance by the 50%, will only pay out half of the claim, resulting in a pay out of $25,000 for contents worth $100,000. Some insurers even include a clause in which they have the right to reject a claim completely, in the event that the policyholder has deliberately or substantially under-insured.It’s also worth checking the policy for limitations on the loss that can claimed. Most homeowner policies contain a limit to the amount that can be claimed as a whole and by merchandise category. And there may be restrictions on the source of any damage. For example, the policy owner might be covered if the house burns to the ground, but not if there’s a flood in the basement.What documents are needed for antiques? Any receipts of items bought need to be kept (if it’s too late for the receipt, make a note of when the item was bought, from whom and how much was paid for it), and store them with a photograph of the goods and a detailed description that includes measurements, materials of manufacture and any repairs or improvements that might have been made. Any part of an item that is replaced should be kept, because the insurance company may demand proof that the restored antique is the same item as the one listed on the original purchase.What does ‘contents’ cover? With most Home and Contents insurance cover, the term ‘Contents’ includes all household goods, personal effects, cash, coins and financial instruments (the latter being treasury notes, savings certificates, stamps, money orders, gift certificates etc.), and articles of special value, listed on the Policy Schedule under ‘contents specified items’. A maximum limit often applies to Contents items (in some cases as low as $1000), so it may be necessary to list some items separately on the Policy Schedule, and with some companies there is also a limit on payouts for cash and financial instruments.What happens when you are involved in a loss settlement? We all know that insurance policies can be complicated and boring – but it really is worth paying attention to the settlement agreement. A typical policy will state that: ‘The insurer is obligated for no more than the least of four measures of losses”. The four measures are:• The actual cash value (usually based on a replacement cost basis);• The cost of restoring damaged property;• The scheduled value of the item (based on purchase price or current appraisal);• The replacement with property of similar kind and quality.The most used option – because it’s usually the least expensive – is replacement cost. Because the insurer is usually able to purchase at wholesale, the replacement cost is less than retail. So if you request a cash payout, the insurer will provide you with their replacement cost – which doesn’t cover the retail cost. Now this might not apply to antiques – few insurers would have a wholesale arrangement with antique dealers.Under insurance legislation in some countries there is a 14-day cooling off period to review the policy. Questions needed to be asked include:• What does the policy cover and what is excluded?• Does it cover accidental damage?• Is the risk of under-insurance minimized?• What goods need to be specified in the policy,• Do I have more valuable items that require a separate policy?
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