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How should you insure your valuables or luxury items? Know what insurance works

Dubai: An insurance policy can cover just about everything you own, be it your home, the contents of a rental home, your car, your business, your health, and even your life. But how does insurance work when you want to secure your valuables or luxury items?

From designer watches to luxury handbags, from original art to rare vases, collectors have all manner of valuables to protect. While many carriers offer coverage for valuable items and collectibles, some offer highly specialised coverage for different categories of valuables.

“Unlike traditional insurances, when it comes to insuring expensive jewellery and valuable items, things get a little bit complicated. Part of that complication is due to the way jewellery and valuable items are insured,” said Ian Bagley, an insurance analyst based in Dubai.

“The reality is the most common and least expensive types of coverage are usually not the best. Exactly which you choose will depend on how valuable the item is. The more valuable it is, the more deserving it is of a dedicated individual policy.”

What items are defined as ‘valuable’ for an insurer? To an insurer, the term ‘valuables’ refers to what can be quantified as expensive, rare, or collectible. Among others, insurers consider fine jewellery, watches, art, silverware, rare coin or stamp collections, high-end sporting goods or musical instruments, cameras, and electronics, as ‘valuable’.

Homeowners, renters insurance may not help

A homeowner’s insurance policy will generally allow you to cover expensive jewellery and other valuable items, such as family heirlooms, or expensive equipment. However, this is not necessarily the best way to cover a particularly expensive item.

“While homeowners insurance and renters insurance provide basic coverage for the contents of your residence, policies come with limits for household contents in general and sub-limits for certain types of items in particular, and some policies exclude collections altogether,” added Bagley.

“Coverage of jewellery and watches, for example, has a sub-limit. The broker may be able to extend limits by adding a ‘rider’ or ‘floater’ to the policy — a rider to cover a category or collection of items, a floater to cover an individual piece — but that still would be inadequate to cover pricier items.”

In other words, homeowners and renters insurance policies typically have limits on how much they’ll pay for a loss, as well as very specific requirements for the events that cause the loss. They’re also very unlikely to cover damage to a particularly expensive item.

What does it mean to have a ‘rider’ or ‘floater’ in an insurance policy? An insurance rider is an addition to an existing insurance policy that allows you to add specific insurance products to your basic coverage. Depending on your needs, a rider may expand or restrict coverage.Floater insurance covers personal property that is easily movable and provides additional coverage over what normal insurance policies do not. Also known as a ‘personal property floater’, it can cover anything from jewellery and furs to expensive stereo equipment.

How to go about insuring your valuable items?

“Valuable items, like a wedding ring or antique collection, are likely prized possessions, and it’s important to get the right type of insurance and the right amount of coverage to protect them,” said Anil Pillai, a UAE-based consumer banking and insurance sector analyst.

“Check to see what the policy covers and what coverage limits are for valuables. Also, as most insurance policies have different coverage limits for damage and theft, find out if the policy includes all coverage for personal property to determine what losses are covered under your policy.”

Bagley advised that if you’re unsure how much valuable items are worth, consider getting them appraised, which will help determine if an insurance policy’s coverage limits offer enough protection or if extra coverage is needed.

“As some valuable items appreciate over time, it’s good to get appraisals every few years to ensure their value is accurate and the coverage is sufficient. It may be critical to get valuable heirlooms appraised since it might not be possible to compare those to other items on the market,” he added.

3 steps to ensure all your valuables are insured

1. Catalogue all what you deem valuable

Pillai considers the first step to insuring all your valuables is creating an inventory of all your prized belongings with details on your valuables. This involves cataloguing and including details of each valuable item, plus the original value, date of purchase, place of purchase and the receipt if possible.

“Having an inventory comes in handy when filing a personal property claim, but this inventory will likely need to be updated as you gain additional valuable items. It may be easy to forget to list a new item, but it saves you time and money in the long run in the event of a claim,” added Pillai.

“Alternatively, you could also pay specific attention to serial numbers and brands, or other identifying information. Saving these details will enable quick access (as well as a secure location) when you need to file a property damage claim.”

2. Get a quote from a specialty insurer

One way to insure expensive jewellery or other valuable items is to get a quote from a specialty insurer that covers fine jewellery and other valuables or purchase a scheduled ‘personal property endorsement’, explained Bagley.

“A ‘personal property endorsement’, an add-on policy available from most insurers, allows for an increase to the coverage limit for specific items, like a fine art collection or firearm. Purchasing an endorsement will raise the premium but result in a higher pay-out after a covered loss,” he noted.

3. Consider buying a buyer’s protection plan

When purchasing new valuable items, both Bagley and Pillai suggested that it would be worth purchasing a buyer’s protection plan from the retailer.

“Popular with jewellery and electronics companies, a buyer’s protection plan offers coverage on top of what a standard home or renters insurance already includes. There is usually a monthly or annual fee, but it may cost less than buying an add-on policy,” explained Pillai.

Key takeaways

Although a standard home or renter’s insurance policy will cover some valuable items, it will have coverage limitations or may contain specific requirements on which high-value items can be covered.

“As a general rule, if you have a large number of valuable items, they can be covered under homeowners or renters insurance. But that’s only if they collectively come within the coverage threshold of valuable items for that policy,” added Bagley.

“For more valuable items, the ones that exceed coverage limits in your policy, look into a buyer’s protection plan from the vendor. If that’s not suitable, or time limit for coverage has passed, get a separate policy on that item. It’ll be more expensive, but it’ll do exactly what you want it to.”

Regardless of the insurance you use, insurance experts reiterate reviewing your policy to ensure valuable items are addressed within your coverage. “This may mean taking some time to specifically identify and assign a value to any property that has a higher replacement value,” Pillai added.

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