Thursday, 3 June 2021

Insuring collections and protecting valuables from the consequences of a natural disaster isn't the first issue a homeowner should consider when determining insurance coverage for hurricane, earthquake, fire or other loss – but it should be a priority.

In 2017, overall losses, including uninsured damage, associated with natural disasters hit a record high of $330 billion.

Many collectors likely believe their valuables and collectibles are covered under basic homeowner's insurance in the event of a natural disaster. In many cases, however, they're not, and even if there is some protection through a homeowner's insurance policy, it likely won't cover the full value of your prized collectibles.

Consequently, all too often a homeowner could lose collectibles and valuables as well as the investment income from those items.

The need for collectibles insurance

To better protect one's collectibles and valuables in the event of a disaster, collectors should take a closer look at collectibles insurance.

Collectibles insurance goes significantly further than homeowner's insurance in covering valuables and collectibles located in the home. By and large, most collectibles insurance policies cover fire, flood, earthquakes, hurricanes, as well as theft and/or burglary of household possessions. Collectibles insurance valuations are also pegged to current market value of collectibles and valuables, insuring that policy holders get full value for their possessions if they are lost or ruined in a natural disaster.

While premium prices vary for collectibles insurance, expect the premium to be approximately at 0.75 percent of the total estimated value of the insured collectibles, with no deductible. Insurance premiums slide downward with the addition of a policy deductible.

Here are several other steps homeowners can take to protect their collectibles and valuables:

1. Take an inventory. An inventory can be invaluable in expediting a claim in the event of a natural disaster. Along with any documents of authenticity, store your inventory list in a safe place, like a safe or bank security box. If you create a digital form, store it online safely on the cloud, or in a secure online storage application.

2. Take photos or videos. Insurance companies may not require visual proof of all your prized possessions through collectibles policies, but photos and videos will come in handy in documenting the loss of especially high-value collectibles. Make sure to also take photos of any documents of authenticity. Also, if you have digital copies of your collectibles and valuables, keep backup files stored in a secure location outside the home.

3. Create an insurance policy checklist. Before shopping for collectibles insurance, create a list of priorities that factor into the maximum financial protection for your collectibles and valuables. Make sure the list includes the estimated value/price of the collectibles and valuables to be covered, policy premium price expectations, any fees linked to the policy, and the policy payment terms. Like most insurance policies, review your documents closely, and look especially for any policy exclusions before signing on the dotted line. 

What to do in the event of a collectibles loss in a natural disaster


In the event of a loss, connect with your insurance company as soon as possible, and provide everything needed to initiate a policy claim such as:

  • Your contact information, the date of the disaster, and insurance policy number
  •  A list of damaged or lost items and any relevant photos or videos

Collectors are no doubt proud of their prized possessions and want to protect their property, and their investments, as robustly as possible.

A collectibles insurance policy can help do just that, and provide maximum coverage in the event of a hurricane, fire, flooding, or other natural calamity. You may not be able to stop Mother Nature, but with the proper insurance coverage, you can protect your investment.

The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or financial advice. You should consult your legal, tax, or financial consultant about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates. 

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