I received a text message from one of our car insurance clients last week. Her car had been broken into and a ring was missing. She wanted to know if the loss of the ring was covered by her car insurance. It’s not; whenever an item that is not a part of the car is stolen from a car, it’s considered a home insurance claim. This goes for jewelry, CDs, smart phones, laptops, tablets, golf clubs, etc. With this being a home insurance claim, it’s subject to the home insurance deductible or 1% of the home’s insured value, as well as any limitations or caps to the amount of the loss. In my client’s case, even after the deductible of the home policy is met, her coverage was capped at $1,000 for any jewelry that’s stolen.
Scheduling an item simply means you’re insuring it for an agreed amount or value such as a $20,000 engagement ring or a $5,000 shotgun, or a $10,000 painting. Depending on the carrier, value is determined by the client either picking an amount of coverage, or with an appraisal that no more than 3 years old. If the item is a recent purchase, then a copy of the original purchase receipt will suffice. The types of items appropriate for scheduling include:
- Jewelry with a value of $2,000 or more
- Original artwork and sculpture
- Oriental rugs with a value of $5,000 or more
- Silverware, gold ware, and certain crystal
- Stock securities
- Collections such as stamps, coins, trading cards, comic books, & first editions of noteworthy authors
- Musical instruments
While all homeowner’s policies provide some level of coverage for these items under the contents or personal property section of the home policy, scheduling them enables the homeowner to cover the valuable items without regard to the policy’s limits or restrictions. Home insurance policies typically have limits or restrictions on coverage for these items that fall into two categories;
- Amount of coverage
- Types of loss
Amount limits: Most companies have a cap on the total amount of coverage paid on items that should be scheduled. These amounts can either be on a per piece basis, such as $1,000 on a single item of jewelry, or on an aggregate basis such as a total amount of coverage on all jewelry such as $5,000. This means if there are items that go beyond this limits, then the insurance company is limiting the amount of coverage regardless of the type of loss (fire, theft, tornado, etc.) to a specific dollar amount. Any person desiring more coverage needs to schedule the item or items for the amount and pay for that coverage.
Types of loss: In addition to amount limits, insurance companies may tie the amount of coverage to a specific peril or loss such as;
- If the jewelry or artwork is lost to a storm or fire then the amount of coverage is one amount ($2,500, $5,000, etc.)
- A lower limit such as $500 or $1,000 kicks in if an item is lost to theft
The one peril that is usually not covered, unless the item or items are scheduled is mysterious disappearance. This peril applies when a ring is lost and you don’t know how or where it was lost. It’s important, however, to confirm if the policy covers mysterious disappearance as I’ve run across a policy or two that either doesn’t cover it or charges more to cover an item for this type of loss.
It’s a good idea to get valuable items appraised every few years even if they’re scheduled. With the increase in value of gold and platinum, it’s very possible for items that have been owned items for several years to be underinsured because they’re worth more, in some case substantially more.
If you own jewelry or collectibles but have not scheduled them, take a moment to review what your policy limits are on the amount of loss; both per item and aggregate. In addition, confirm what types of loss are covered and what types aren’t. It’s much better to know this now rather than after fact!
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