Review Your Collectibles' Valuation and Insurance Plan
An annual review of your collectibles' valuation and insurance plan can help protect their value and ensure that they're adequately covered in the event of loss, damage, or theft. Here are several steps to consider including in your review.
Inventory your collection. Create a detailed inventory of all the items in your collection. Be sure to include the name, description, date of acquisition, purchase price, and identifying marks or characteristics. Consider taking high-quality photographs of each item from various angles. Also keep digital and physical records of all purchase receipts, certificates of authenticity, appraisals, and all other relevant documents.
Determine the market value. Hire a qualified appraiser who specializes in your type of collectibles to assess the current market value of your items. An accredited appraiser will provide a formal report that can be used for insurance and tax purposes. Since values can change over time, it's important to have your items appraised every several years to ensure that your insurance coverage reflects their current value.
Choose the right insurance coverage. While homeowners insurance may provide some coverage for collectibles, it's often capped at a low amount which may be insufficient for valuable collections. So consider a rider to your homeowners policy that specifically covers high-value items. For significant collections, it's best to obtain a separate insurance policy tailored specifically to collectibles that includes protection against risks like accidental damage, loss during transit, and natural disasters that may not be covered under a standard homeowners policy.
Assess the condition and maintenance. For particularly valuable items, maintain detailed condition reports that assess the state of the item at the time of an appraisal. Condition can significantly affect value, so having these reports on file can help support future claims. Proper storage and maintenance are also critical to preserving the value of your collectibles. Invest in secure storage solutions, such as climate-controlled environments for art, or safe deposit boxes for rare coins and jewelry. Ensure that your insurance policy covers items stored off-site.
Understand the settlement process. Understand how your insurance company settles claims. Some policies will pay out the market value of the item at the time of loss, while others will cover the replacement cost (up to the insured amount). So be clear on how your policy handles payouts.
Include collectibles in your tax and estate planning. Consider estate planning strategies such as placing your collectibles in a trust or specifying how they should be handled or distributed in your will. In some cases, the sale or donation of collectibles may have tax implications.
By annually reviewing your collectibles' valuation and insurance plan, you'll be well-positioned to protect the financial and sentimental value of your collectibles.