The Case of the Diamond Necklace: Homeowners Insurance vs Valuable Articles Policy

Picture this: Your client is getting ready for a big night out, and has the perfect diamond necklace to go with their outfit.

But when they look for it, it’s nowhere to be found! This valuable jewelry is gone without a trace.

It’s a bad situation, and it’s all too common.

Who do they call next? You, their insurance agent assuming their Homeowner’s Insurance policy will cover the loss.

While standard Homeowner’s Insurance (HO3) policies do provide coverage for valuables, it typically isn’t enough to replace most losses.

Special limits for such policies typically include:

-$200 for money, bank notes, gold, etc.

-$1,500 for watercraft of all types; including their trailers, furnishings, equipment, and motors

-$1,500 for loss by theft of jewelry, watches, furs, precious and semiprecious stones

-$2,500 for loss by theft of firearms and related equipment

-$2,500 for loss by theft of silverware, goldware, and platinum ware

-$2,500 for property on the residence premises used primarily for “business purposes”

These coverage caps are often far below the cost of lost or damaged valuables, and the amount paid out by the policy is based on the current cash value of the product, which is often a sharp depreciation from the original value.

Further, HO3 policies don’t cover losses due to mysterious disappearances or breakage, two of the most common reasons valuables are damaged or lost.

In the lost necklace example above, the HO3 policy wouldn’t pay out unless credible evidence of theft could be provided. Even if the policy did pay, the $1,500 cap on coverage would fall below the value of many single pieces of jewelry, and much less an entire collection.

The list of valuables that need coverage extends far beyond jewelry. Loss of art, silverware, and other valuable collectibles easily exceed the payment caps on standard HO3 policies.

For clients in need of special valuables coverage, agents should recommend a separate valuable articles policy.

Advantages of a valuable articles policy:

  • A valuable articles policy has a much higher coverage ceiling compared to the HO3 limits.

For example, a Monoline Personal Article Floaters policy from Risk Innovations can go up to $1 million – and we have special policies for coverage needs exceeding that limit.

Policies can be set up with either a blanket coverage policy or an itemized one.

  • In the case of blanket coverage, it is easy to add items to and from your coverage, and appraisals aren’t necessary on any item worth less than $50,000.
  • For itemized coverage, a predetermined value is set for each item. This means that in the event of a payout, the full value of the item is restored instead of a depreciated cash value.

A valuable articles policy picks up on coverage where homeowners insurance stops, and covers mysterious disappearances and breakage as well.

When it comes to protecting valuables, standard homeowners insurance won’t cut it. Ensure your clients are fully protected with a valuable articles policy.

For more information on valuable articles policies provided by Risk Innovations, reach out to our Personal Lines department at 1-800-913-6696.

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