Barbies & baseballs & bears (& more)

Rough Notes, Jul 2003 by Boone, Elisabeth

What do your clients love to collect? Chances are, American Collectors can cover it

It's a sunny Saturday morning, and as you cruise for a spot in the jampacked parking area, your heart's already started to pound. You leap out of the car, reach into the trunk for your red wagon, and join the throng of chattering, jeans-clad people surging eagerly toward the entrance to - the flea market! Like everyone else in the crowd, you just know that today is the day you'll find that 1935 Louisville Slugger - that Victorian wrought iron gate - that Lionel locomotive in mint condition - that 1968 Barbie in the original package - or something you weren't even looking for but will absolutely have to own.

Even if you don't fit the description of a flea market fanatic, a swap meet savant, or a garage sale guru, you can be sure that plenty of your clients are rising at dawn on Saturdays, putting on their most comfortable shoes, and heading out in search of treasures. A recent Parade magazine article (May 11, 2003) profiled Ralph and Terry Kovel, the "duke and duchess of the antiques world." According to the Kovels, annual sales at flea markets, swap meets, and antiques malls now total more than $30 billion. What's more, the National Flea Market Association noted in the article that, in an otherwise troubled economy, flea market sales were up 11% in 2002.

No two ways about it, $30 billion is a chunk of change. That's the good news. The bad news is that if your clients are relying on homeowners coverage to protect their collectibles investment, they-and you-may be in for a big disappointment. Some homeowners policies pay a fixed amount for unscheduled antiques and collectibles; other policies are not specific about collectibles and leave it up to adjusters to settle after a loss. The typical policy covers only named perils and excludes flood, water damage from drain backup or overflow, and earthquake. A high deductible will reduce the amount the insured can expect to receive for lost or damaged collectibles.

The really good news

The really good news is that your clients' treasures can be appropriately and affordably protected, and you can enjoy increased profits and retention. American Collectors Insurance, Inc., of Cherry Hill, New Jersey, established in 1976 to insure antique and collectible vehicles, has since expanded to provide coverage for a host of collectible items. "A lot of classic car owners have their garage walls lined with memorabilia related to their particular vehicle, like manufacturers' advertising signs, service station signs, and other items," explains Jill Bookman, vice president of ACI and the daughter of the agency's founder. "Our customers started asking us if we could insure these items, so we worked with our underwriter to create a policy that would meet their needs." ACI is now in its tenth year of insuring collectibles, and this segment of its business is growing steadily.

American Collectors' experience insuring antique and collectible vehicles translates well into protecting collectibles, Bookman observes. "There are a lot of features in our antique car policy that we transferred to the collectibles policy: agreed value, inflation guard, automatic 30-day coverage-because a lot of the same things apply to collectibles as apply to cars," Bookman explains. "Like vehicles, these items tend to appreciate in value, so the inflation guard feature is built in to reflect that. The automatic 30-day coverage recognizes that collectors will go to an auction or other event and snap something up, and they want the peace of mind that comes from knowing their purchase is protected."

Working with American Bankers Insurance Company of Florida, ACI writes business throughout the continental United States (in Minnesota, Collectibles policies are underwritten by American Reliable Insurance Company).

Policy features

Here's how the ACI collectibles policy works:

* The policy provides specific coverage for a collection, including accidental breakage, theft, fire, windstorm, flood, water damage, and earthquake.

* Additions to the collection are automatically covered for 30 days for values up to $2,000.

* More than one collection can be insured under the same policy.

* Collectibles individually valued at more than $2,000 are covered as scheduled items under the policy at no additional charge. Scheduled items are covered on an agreed value basis.

* An inflation guard feature automatically increases the value of scheduled items by 2% per quarter, up to a maximum of 8% per year, at no additional cost.

* The deductible is $100 per occurrence.

* The annual premium is $75 for coverage up to $10,000. For collections valued at more than $10,000, additional coverage may be purchased for $7.50 per $1,000 of value. Rates are the same for any kind of collection.

The policy excludes loss caused by or resulting from normal wear and tear, gradual deterioration, inherent vice, insects or vermin; repairing, restoration, or retouching; being handled or worked on; theft from any unattended vehicle; and mysterious disappearance.