When a homeowner's policy is not enough

William Sear loves baseball memorabilia. His collection, which includes vast amounts of material on the Braves franchise, is so valuable that even the Smithsonian is interested in it. So when the Atlanta collector had to choose a company to insure his collectibles, he decided a traditional insurance company was not for him.

"The homeowners' people - like Allstate or State Farm - don't understand the collectibles market," says Dr. Sear. "They weren't able to give me the right kind of insurance policy at the very best price."

Specialty insurance - like the kind Sear found for his baseball collection - is not a new concept. But it's become one of the fastest growing segments of the insurance industry. While many Americans simply insure their most valuable possessions under a homeowner's policy rider, collectors of stamps, coins, guns, and jewelry are increasingly turning to specialty insurance agencies to provide peace of mind for their valuable hobbies.

"Homeowners' policies are designed to insure items in your home such as furniture, clothes, and appliances - not collectibles," says Dan Walker, owner of Collectibles Insurance Agency in Westminster, Md. "Such policies often have very low limits for collectibles, often have limits on coverage - such as breakage - and usually require you to completely inventory your collection and keep the inventory updated annually."

By contrast, most collectibles insurance policies not only have less expensive premiums than a homeowner's policy rider, they also only require you to list items over $5,000 in value. In addition, because a specialty insurer is more familiar with the true value of a collectible, reimbursement for an item that was lost, stolen, or damaged is a lot easier. Also unlike a rider, most specialty insurance policies do not require you to submit a detailed inventory; instead the collector only needs to provide a brief statement about what is in the collection.

"If you have a sports memorabilia collection that's constantly changing with new purchases and disposals of unwanted items, you need an insurer that understands the business," says Sear.

Of course, baseball-card collectors aren't the only ones seeking out specialty insurers. Classic-car buffs have been using them for more than five decades. The primary reasons are price and coverage. Standard insurance annual premiums can cost up to 500 percent more than those offered by a specialty program. A specialty insurer also provides a more comprehensive policy in the event of a total loss.

"Actual cash value" is the basis insurers use to cover most everyday cars and they pay out a depreciated book value in the event of a claim. Specialty collector-car insurance generally provides "agreed value" policies that guarantee a specific amount back in the event of a total loss. There is no depreciation of a car's value with an agreed-value policy.

"The bottom line is that classic car insurance will save you a lot of money and offer better benefits than standard insurance companies," says Bob DeKorne of Hagerty Insurance Co., a leading specialty auto insurance company in Traverse City, Mich. "Specialty insurers know that many classic cars appreciate in value. As a result, you are almost certain to get the full value of your classic car back if it's totaled."

That's one of the primary reasons that William Porter of Poquoson, Va. decided to insure his 1978 green Triumph Spitfire with a specialty insurer.

"I only pay about $100 a year to insure this car," says Mr. Porter. "That's considerably less than a standard insurer and a specialty insurer actually understands classic cars a lot better."

Another form of specialty insurance covers jewelry. Like other forms of specialty policies, it's often significantly less expensive than taking out a rider on a homeowner's policy. But by having a separate policy, you don't have to count it against the homeowner's policy should you file a claim.

"Because our only focus is insuring jewelry, we provide much better customer service than a standard insurer," says Tom Adelmann of Jewelers Mutual Insurance Co. in Neenah, Wis. The company is the leading US insurer for the jewelry industry, with more than 140,000 customers nationwide.

"Insuring our jewelry with a specialty company is easier than dealing with my homeowner's policy, and the premiums are cheaper than if I got a rider," says Dennis Taphorn of Henderson, Nev., who took out his first jewelry insurance policy when he bought his wife's wedding ring. "Most important, when you lose something with a rider, you may not get replacement value. Not only do I get replacement value, I can choose the jeweler of my choice for repair or replacement work."

Of course, not every specialty insurer receives such high marks. That's why insurance experts advise consumers to take these steps before buying:

• Make sure it's a legitimate company that has earned at least an A financial rating from A.M. Best (www.ambest.com).

• Carefully read the policy to know what is covered and what is not covered in the event of loss, damage, or theft.

• Find out the limitations on your existing policy. "The details about the rider are really important," says Chris Parmeter, an insurance agent with Monroe Insurance Agency in Conroe, Texas.

• Get a current appraisal for a rider on your homeowner's policy in order to make an informed decision.

• Keep your insurance documents in a safe and secure place.

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