Summary: Coin and stamp collections pose the question of whether this type of property is subject to the special limitations contained in the homeowners policy for money and stamps. The issue is not specifically addressed in current forms, leaving the question open to insurance company policy or court decisions in a particular jurisdiction. Varying approaches to policy drafting have attempted to settle the issue, but the most current homeowners language leaves the matter unresolved. Arguments both for and against including such collections in the policy's special limits on money and stamps may be made.
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The introduction of simplified language homeowners policies, both the Insurance Services Office (ISO) version and those of some independents, reopened the question of applicability of the money and stamp limits to coin or stamp collections. This issue, raised long ago under the original homeowners policies of the 1950s, was temporarily resolved by De Biase v. Commercial Union Ins. Co., 286 N.Y.S.2d 145 (N.Y.S.1967). The $100 money limit did not apply to rare coins, taken out of circulation by the insured, a numismatist, and subsequently stolen from the insured's residence. Instead, these coins were considered general personal property and covered to the full personal property coverage limit.
The court found that money is a medium of exchange, whereas the coin collection was secreted away in the insured's residence apart from whatever money and coins the insured used as a medium of exchange. The collection was viewed instead as a commodity that could be bought or sold at considerably more than the face amounts of the coins.
In an opposite opinion, the Texas Supreme Court in National Surety Corp. v. Seale, 506 S.W.2d 579 (Tex. 1974) found a coin collection was money. This finding also favored the insured, however, allowing recovery for burglary of the collection from a safe, under a blanket crime policy covering money and securities. The court made a distinction between the interpretation of money in the insuring clause and, as in the De Biase case, when applied as a limitation against recovery. The court upheld the long-standing principle that a finding of ambiguity either in the insuring clause or in a limitation of coverage must be resolved against the maker of the contract, the insurer, and in favor of the insured. In effect, in these cases, the insured was granted the best of both worlds. A similar finding for the insured, that coins are money under a crime policy covering money and securities, had previously been handed down by a Missouri appellate court in Cornblath v. Fireman's Fund Ins. Co., 392 S.W.2d 648 (Mo. App. 1965).
Likewise, in Walker v. State Farm Fire & Casualty Co., 758 So.2d 1161 (Fla. App. 2000), the court failed to differentiate between coins used for currency and rare, collectible coins. The homeowners lost $46,230 worth of rare coins due to theft. Their insurer, State Farm, paid only $200 for the loss, claiming that the coins fell into the special limits of liability section for money, bank notes, coins, and medal. The homeowners argued that the term coins was ambiguous and should therefore be read to include their stolen rare coins. The court, however, stated, "We find that the term 'coins' means just that." There was no distinction, according to the court, because money was included in the list of items subject to the special limits. If the insurer wanted to simply limit coins in circulation, the court reasoned, money would be a sufficient term. But, because money and coins were used separately, rare, collectible coins are included.
One decision, though, favored the insureds in their claim for a stolen coin collection valued at around $19,000. The court in Michaels v. State Farm and Casualty, 1997 WL 1433725 (Pa. Com. Pl. 1997) held that the phrase ″money, bank notes, coins, and medals″ was ambiguous. The policy did not contain the phrase ″numismatic property″ (found in many earlier homeowners policies, but since removed from many policies), which would have clarified the limitation. In addition, the policy promised to cover ″collector's items,″ which meant that, if the limitation applied to coins, would both exclude and cover the coins. Since both could not be true, the court found in favor of the insureds.
Following the De Biase case, the homeowners policy language was modified to clarify its intent to apply the money and stamp limitations to coin and stamp collections. The $100 money limitation was amended adding the words "numismatic property" while the $500 stamps, etc., limit was changed to apply to "…stamps, including philatelic property;" thereby resolving the conflict in favor of applying the limitation, as the companies had originally intended. With the revised wording, the further question arose: What is numismatic property? In Cotlar v. Gulf Ins. Co., 318 So. 2d 923 (La. Ct. App. 1975), the court found that a collection of Mardi Gras souvenir doubloons was neither money nor numismatic property. The court relied on the Oxford English Dictionary definitions of numismatic—pertaining to or related to coins or coinage; consisting of coins; and coin—a die, stamp, or piece of money, in particular a piece of metal of definite weight and value, usually a circular disc made into money by being stamped with an officially authorized device. The court also accepted testimony from two members of the American Numismatic Association that numismatic property necessarily is or has been used as a medium of exchange, while these doubloon replicas had not. Note, though, the phrases ″numismatic property″ and ″philatelic property″ have disappeared from both the ISO and AAIS homeowners forms, whether for better or worse.
In McKee v. State Farm Fire & Casualty Co., 193 Cal. Rptr. 745 (1983), one independent insurer found that its retention of the numismatic property reference protected it in a lawsuit. An insured attempted to convince a California appellate court that his two stolen bags of United States silver coins minted prior to 1965 were too rare to be considered ordinary money, yet not rare enough to be numismatic property. Therefore, he felt that the policy limitation on such items did not apply. In addition, the insured felt the coins should be looked upon according to their use (a collection) rather than their description (coins). The court disagreed on both counts stating that (1) it was reasonable to regard the coins as numismatic property and (2) it was more reasonable to regard descriptions of property as having reference to kind instead of use. It is interesting to note that State Farm subsequently rewrote the special limitation on money to omit the reference to numismatic property.
In another case concerning silver coins, Huffman v. Hartford Casualty Ins. Co., 434 So. 2d 1296 (La. App. 1983), a Louisiana appellate court considered the use rather than kind of property as germane to its decision-making. While the case concerned the money extension contained on a commercial multiperil instead of a homeowners policy, it is still worthwhile to explore the court's approach to the case.
The insured was a dentist whose bag of pre-1964 silver dimes worth $14,000 was stolen from a safe in his building. Since the dimes were still negotiable currency, the insurance company wished to make the loss subject to the $250 policy limit on money. The insured was able to prove to the court's satisfaction that he intended to melt down the dimes for use in his dental work. As such, they fell under the definition of covered business personal property (as dental supplies and materials) and were covered for their full value. It is possible that this case might be used as precedent for a situation involving theft of jewelry containing coins. By incorporating a gold coin, say, into a ring, necklace, or bracelet, does the coin then take on the characteristics of jewelry, in which case there is a limit for loss by theft of $1,500, but no limit for loss by fire? Or, does the limit for coins apply to the piece of jewelry? No legal cases were found that addressed this point.
On the newly updated ISO form (HO 00 03 03 22), the basic limits were increased to $300 (from $200) for special limit 3.a. (money, bank notes, coins, etc.) and $2,000 (from $1,500) for the special limit item 3.b. (securities, tickets, stamps, etc.). The AAIS form HO 0003 09 08 limits are $250 on money, and $1,500 for securities, stamps, etc. ISO allows the amounts to which these items may be increased by endorsement to $2,500 for money, and a maximum limit for stamps is not shown. If the insured has named perils coverage for contents, endorsement HO 04 65 03 22 Coverage C Increased Special Limits of Liability should be used to increase the coverage limit. When the insured has open perils on contents, the special limits can be increased by attaching endorsement HO 04 66 03 22, Coverage C Increased Special Limits of Liability. See Standard Homeowners Endorsements Discussed. The AAIS endorsement is HO 2565; AAIS rules allow coverage to be increased as allowed by the insurer.
However, if the insured has a collection of stamps or coins, the best course of action is to schedule the property using the HO 04 61 Scheduled Personal Property Endorsement. The endorsement provides coverage for damage caused by particular perils to the stamps and coins such as fading, creasing, denting, scratching, or tearing. The form now reads "postage stamps" and ″rare and current coins″.
December 2018