Don't Shortchange 'Valuable' Articles

Besides, its easier to start a conversation about ones prized possessions than about insurance. Think about it: Would you rather discuss your auto insurance or your sports memorabilia collection?

Theres no better time to promote valuable articles coverage. Valuable articles, ranging from jewelry and fine art to all types of collectibles, make up multi-billion dollar industries.

For example, consumers spend $50 billion a year on jewelry, of which $1 billions worth disappears, according to the U.S. Department of Justice. Sports memorabilia is a $2-billion-a-year industry. (If only Mom didnt throw out those baseball cards from the 50s and 60s!)

These days, everything from Star Wars posters to gas-station toy trucks could be valuable. Many people are pleasantly surprised to learn that their hobbies have turned into lucrative endeavors. Today, owners of valuable articles range from the wealthiest to the average wage earner.

The scary reality for most owners, regardless of their wealth, is that their valuable articles are often drastically underinsured and inadequately protected.

A survey conducted at Chubbs "Antiques Roadshow" last summer revealed that nearly one-third of respondents took no special measures to protect their valuable possessions. More than 80 percent were unaware that a typical homeowners or renters insurance policy provides limited coverage (as low as $1,000) for certain categories, such as jewelry, furs or silver, while about half of the respondents had not purchased higher amounts of coverage or an additional policy to protect their valuables.

Forty-two percent of respondents werent sure what type of coverage they had on their valuable possessions or on what basis a claim would be paid. And 37 percent were not sure whether their insurance would cover the full cost of replacing an item that breaks.

The good news: Many owners surveyed realized that they should discuss the insurance coverage on their valuable possessions with their agent or broker. Discussing valuable articles coverage during an annual insurance review can provide benefits for the agent and customer.

The customer will likely appreciate the value that the agent brings by developing a better understanding of what is, and isn't, covered in a policy. The agent is likely to generate additional sales as well as a source of protection against an errors and omissions claim. The best time to talk about policy limitations on jewelry, for example, is before someone loses their engagement ring–not after he or she is devastated that it is gone and finds out how easily it could have been covered.

The discussion should also help to retain an account, as statistics have shown that the more lines of coverage an agent writes for an individual customer, the longer that customer is likely to stay with the agent.

There are several basic facts agents and brokers should discuss with their clients. They include:

Taking a high deductible on homeowners coverage may negate coverage for the loss of a valuable possession.

Some homeowners policies contain exclusions regarding a "replacement cost" settlement for items of rarity or antiquity. Hence, the amount of settlement may be questionable if a customer relies on contents coverage for an antique or rare collectible.

For the broadest scope of coverage, policies should be written on an all-risk basis, including automatic coverage for breakage and mysterious disappearance losses–two features missing from most homeowners policies.

For maximum flexibility in the event of a total loss, policies should offer a full cash settlement option. That way, if a family heirloom or other jewelry are stolen, the client can accept cash for the irreplaceable heirloom and then go to any retailer to replace the other jewelry.

Many policies will not offer a cash settlement for the itemized value, but rather refer the customer to a "preferred" vendor who can offer a similar replacement. If the customer doesn't choose to replace the item through this vendor, the settlement may be limited to the amount the vendor would have been willing to replace the item for.

Expensive articles should be itemized so clients can determine the value, and then receive 100 percent of this figure in the event of a total loss, with no deductible or depreciation. This is especially critical for items whose values appreciate over time.

For other articles, like several pieces of jewelry whose total value is not known, blanket coverage may be more appropriate. It is important, however, to advise that the onus is on the customer to provide documentation at the time of the loss.

"Pair and set" coverage helps protect earrings and other sets when a single item in a set is lost. It does not make sense to replace a single lost earring or a single lost or damaged sterling silver candlestick holder with one that wont be a perfect match. Not only is the damaged item worth less, but the remaining one is also worth less since it is no longer part of a complete set. Some policies will pay to replace the whole pair if the remaining earring is turned over to the insurer.

Clients who travel should consider policies that provide worldwide protection for all jewelry and other items they carry with them. Also, new items purchased during a trip should automatically be covered for an extended amount of time until they can be listed on the policy.

Mary Ann Avnet is a vice president of Chubb & Son, and the marketing and customer relations manager of Chubb Personal Insurance in Warren, N.J.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, June 24, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.