FIND THE GAPS, FILL THE HOLES

It is not hard to find the unscheduled property limitations in a homeowners policy. Each policy contains a “Special Limits of Liability” provision under the personal-property coverage section of the contract. While specific language may vary, it is quite common to see dollar limits placed on property such as coins, stamps, jewelry, firearms, silverware and electronics. It is also common to find exclusions for certain types of losses, such as theft.

There are many benefits of personal inland-marine coverage, but the two most significant are broader coverage and higher limits of liability.

• Most inland-marine coverage is written on an “all-risk” basis, backfilling some of the exclusions of homeowners policies.
• Clients may select the appropriate amount of coverage they need to reasonably replace their valuable items.

A third advantage of inland-marine coverage is that it generally does not have a deductible.

To get the benefit of higher limits, the insurance carrier will need to agree on the requested values based on a certified appraisal, bill of sale or some other credible source.

In addition, the fact that coverage is broader under inland-marine policies does not mean they are free of exclusions. Acting as the risk manager for your clients, you should understand all the provisions, exclusions and limitations on any coverage you suggest. You do not want to end up like the agent I recently encountered who failed to take note of, and more importantly inform his client of, the “mysterious disappearance” exclusion on an inland-marine policy written for a high-priced ring. When the ring came up missing, neither the agent nor his client was happy with the outcome.

CHANGING VALUES

Now that you have sold your client on the virtues of a personal inland-marine policy, your work is complete, right? Not quite. Keeping up with appropriate values of the scheduled items is something that should be revisited on a regular basis.

In a time when many homes have lost value, it is easy to forget that certain items are actually increasing in worth significantly. Have you seen the price of gold lately? In the last decade, it has soared from $240 to over $1,500 an ounce.

Gold is not the only thing going up in value. Recently the Wall Street Journal reported that the World Art Index and the Fine Wine Index both significantly outperformed the Standard & Poor's 500-stock index over the last 10 years.

Encouraging your clients to get updated appraisals serves another purpose. Appraisers can identify loose clasps and bent prongs on jewelry items that may put valuable stones at increased risk of loss.

NOT JUST FOR THE RICH

Scheduled personal-property policies are not just for the wealthy and not just for jewelry, fine art and wine collections.  Many clients have valuable property they have accumulated through hobbies or personal interests.

For example, I recently met with an agent who discovered one of his clients is an avid comic-book collector who has amassed more than 3,000 comics since childhood. Each one is meticulously stored in a plastic sleeve.

This client did not collect the comics for investment reasons. It was just a hobby. But the client got his collection appraised at the suggestion of his agent and was surprised to find out he had over $100,000 worth of comic books in his basement.

Golf clubs, firearms, sports memorabilia, musical instruments and camera equipment are just a few examples of hobbies that can get quite expensive and may need inland-marine coverage.