Insurance Coverage Appraisals: When and Why You Need One
Wednesday, July 24, 2019 in Member Insights
This article will explain why consumers may need insurance coverage for their collections of personal property and why it’s so important to seek out a qualified appraiser when obtaining that coverage.
by Kelly Knoll, ISA CAPP
If you are a collector of fine or decorative artwork, sculpture, jewelry, highly valued collectibles or other rare and unique items, insurance coverage is necessary for a number of reasons. Working with a qualified ISA appraiser can help you get the insurance coverage you need to protect the investment you’ve made in your collection.
Insurance coverage for these types of items may not be as easily obtainable as you might expect, especially without a detailed appraisal to determine the value of the items. Many insurance companies require a formal appraisal prior to adding these items to a policy, or may not even offer coverage of such personal property without an additional or umbrella rider. Most insurance companies have strict guidelines on what they offer coverage on and the value threshold per item. Also, general coverage may not include situations such as damage from a party other than the policy holder or coverage outside of your private residence, including transport, framing and restoration services, or placing the item on loan at a museum or gallery. These are additional needs that are sometimes not taken into consideration when procuring coverage, but should be addressed prior to policy agreement.
As you can imagine, insurance companies commonly cover general "household goods," and when a client has rare and unique items, these pieces need to be documented properly so all parties involved are aware of exactly what the items are, details regarding the pieces, and how the appraiser estimated the value based on market comparables. This appraisal process educates everyone regarding the significance of the pieces, and will take into account future possible market fluctuations to ensure coverage is adequate and the timeline for re-evaluations is properly assessed.
Properly insuring items with the aid of a well-written appraisal report means that if anything happens to the items at any point in the future, the proper steps have already been taken, and the claim will be as streamlined as possible. Also, having a qualified appraiser to regularly update values based on market trends can protect you from being under- or over-insured during your policy period.
For rare, unique, and original items of personal property, appraisers have also been able to assist in investment evaluations determined by the past market assessments of similar items and future increased or decreased earning potential of such items. This assistance may be significantly helpful on many levels to collectors with such needs. Making additions or subtractions to a collection based on investment strategies could minimize risk and insurance coverage overhead.
Be sure you also consider the long-term care needed to keep your pieces stabilized and in the best possible condition. Like most things, all pieces of personal property have their own aging processes and require different levels of care and upkeep. Even if a piece does not immediately present with readily apparent visual issues, an appraiser can determine the current condition of a work, the conservation requirements in its existing state, and the estimated future needs to maintain the piece. Restoring pieces regularly can save considerable time and money, and prevent unnecessary value decreases in the long run.
In summary, taking the proper steps and precautions to appraise your collection before disaster strikes will protect you from much preventable hardship, and can save or even make you money over time.
Ready to take the next step toward insuring your collection? Use our Find an ISA Member database to find qualified appraisers near you.
Kelly Knoll, ISA CAPP, is the President and CEO of Heritage Appraisals in Michigan.