Insurance and Collectibles: What Agents Need to Know

Americans collect numerous valued items, ranging from action figures to Christmas villages. Statistics indicate that sales in the collectibles industry in America are up 63 percent from 2010 to 2011, according to a recent report conducted by CVV, the French Auction Market Authority. The U.S. currently represents 27 percent of the global market share of collectibles. And collectibles are the largest single group of items listed for sale on auction site eBay.

The ComicCon International show—which started 42 years ago as a showcase for comic books, science fiction/fantasy and film/television—in 2010 drew 130,000 attendees to the San Diego convention center. The convention has expanded over the years to include a larger range of pop culture, such as horror, animation, anime, toys, collectible card games, video games, webcomics and fantasy novels.

Why does this matter to insurance agents? Collectibles and collections are personal property that can be underinsured with traditional homeowners insurance contents coverage. A homeowners policy may have, for example, a $2,500 sub-limit (after deductible) for collections. Where there’s valuable property, insurance agents are needed.

A specialty insurance policy that protects collectibles is inland marine coverage that is distinct from homeowners coverage: It offers agreed-value coverage (rather than actual cash value); insures against flood, earthquake and accidental breakage; and has no sub-limit to restrict coverage, points out American Collectors Insurance, a provider of specialty insurance for collectibles and collector vehicles.

While tastes in collections vary, on the following pages are five common types of collectibles:

Insurance for Collectibles: Stamps

Stamps continue to be one of the most widely appreciated items, due in part to their accessibility, stylistic variations and modest pricing. A recent Chinese stamp dated 1882 sold at eBay auction for a whopping U.S. $11,300.

Agents who ask consumers whether they own a collection can make a connection with that person about what they value most. That helps create and sustain customer relationships. Insurance agents can start the process of helping prospects and clients by asking two simple questions:

1. Do you own any valued collections?

2. What do you estimate their value to be?

 Insuring Collectibles: Coins

Many coin collections begin as a passing fancy during childhood and develop into a labor of love. Coins from ancient times to the latest from the U.S. Mint are collected today. Coin values are influenced by five factors: scarcity or rarity, condition or grade, value of the precious metals contained in the coin, demand and quality. 

Collectors can make for great clients because they truly value the service provided by an agent. The typical hobbyist is passionate, supplements his or her collection slowly over time, and often owns items of significant sentimental worth. An agent can tap into that passion and offer a client the coverage they need.

 Insuring Collectibles: Sports Memorabilia

A recent major milestone—New York Yankees shortstop Derek Jeter recorded his 3,000th hit with a home run, and the record-breaking ball was estimated to be valued at upward of $300,000—drove home just how valuable sports collectibles can be. Baseball cards are among the most-searched collectibles on eBay.

The ebb and flow of this niche market is dictated by the ever-shifting relationship between sports and history. Milestones such as records help drive values. There always seems to be another sports record on the cusp of toppling.

Insuring Collectibles: Model Trains

Electric model trains date to 1896. By the 1950s, metal toy trains were among the most-owned toys in the U.S., in part because the end of World War II freed up factories and metal for toy manufacturing rather than weapons.

Today, train collectors flock to shows and to collector websites to buy and sell trains, tracks, layouts and more—and dream about adding to their own personal or club layout. eBay lists nearly 50,000 items related to trains, and the transportation collectibles category on eBay is among its largest. The National Model Railroad Association has nearly 20,000 members worldwide, and all states have local model railroad clubs.

Some collectors may believe they need a formal appraisal of a train or other collection in order to qualify for specialty coverage, but that isn’t necessarily the case. Some providers simply require a basic inventory and can offer comprehensive agreed-value protection.

  Insuring Collectibles: Dolls

Dolls have been a popular collectible item since the 1850s, when artisans would handcraft wooden figures and painstakingly paint the features. It’s commonplace for hobbyists to add to their collections around the holidays by asking for dolls, clothes, houses and furniture as gifts. The industry routinely prospers in the fall and winter, as well as on key dates throughout the year such as Mother’s Day and Valentine’s Day.

In the event of a claim, the homeowners claims adjustment process likely would value a doll collection or dollhouse at actual cash value. For a collector with a dollhouse furnished over a 40-year period, a $2,500 check could underinsure the loss by thousands—maybe tens of thousands—of dollars.

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