Floater Policies: Insuring Your Most Treasured Assets
That collection of early American art you’ve spent a lifetime accumulating. The exquisite heirloom diamond ring that has been in your family for generations. Your one-of-a-kind sable coat bought to commemorate your 50th wedding anniversary. These personal treasures are more than the milestones, memories and lifelong passions they represent.
Each is a valuable asset with real financial worth. Losing that treasure to a thief, a fire or another misfortune would be more than emotionally wrenching: it could be financially distressing as well. That’s why making sure you have the right insurance protection in place is so critical, says John Wilson, Frost Insurance.
“I think most people understand that insuring their property is an essential part of prudent financial management,” he explains. “But particularly when high-value assets are involved, there is more to it than just buying a homeowners insurance policy.”
What you need to know
In fact, says John, many people assume that a homeowners insurance policy is sufficient to protect all the jewelry, furs, art, unique collectibles and special pieces, such as a Baccarat crystal bowl, they have amassed throughout a lifetime. That assumption can be a costly mistake.
“A standard homeowners policy includes coverage for only $500 worth of jewelry, watches and furs,” he explains. “Obviously, you’re quite limited in what you’re going to be paid for an item if something should happen to it.”
Just as important, he continues, a loss or damage to your possessions is covered by your policy only if it happened because of a specific peril, or occurrence, such as a fire or a burglary, named in the policy. What happens if you lose a stone out of your diamond ring while you’re swimming in the ocean? “You wouldn’t have any coverage for that with a standard homeowners policy,” John says.
The solution: a floater,that can either be attached as an endorsement to your homeowners policy or written as a separate policy, depending on needs and preference. A floater enables you to schedule , or list, and insure your most valuable possessions individually for established, agreed-upon dollar amounts. So, if your diamond bracelet is scheduled for $15,000 on a floater and is subsequently lost or stolen, for example, your insurer will pay you $15,000 to replace it.
Additional benefits of a floater: there are generally no deductibles and fewer exclusions than a standard homeowners policy. Even that diamond that falls out of your ring into the ocean is covered—if it’s scheduled.
What you can do
With so much at stake, John recommends that you consider the advantages of a floater or floaters (there are jewelry floaters, fur floaters, art floaters and more) for your most prized and valuable possessions. You’ll want to talk with your risk advisor about your specific needs, but in general, you can work in partnership with your insurer to protect what is precious to you.
- Make an inventory of your valuable assets, including jewelry, art, furs, antiques and special collectibles such as sports memorabilia, stamps and coins. Record each item’s description, when you bought it, how much you paid for it and, if appropriate, any additional identifiers, such as serial numbers.
- Document your assets with photographs or videos. A clear visual record will help you establish the existence, condition and value of individual items.
- Make sure you have appraisals from reputable, specialized professionals for your most valuable assets. You’ll also want to update any appraisals more than 5 years old, because assets’ values can fluctuate over time. Some insurers will assist you by coordinating an inventory, third-party appraisals and even photographic documentation of your items.
- Keep copies of each asset’s sales receipt (especially if it was recently purchased) and its appraisal, along with any documenting photographs or video, in your home inventory file. Store them in a fireproof, waterproof cabinet or container, or a safe. Even better, place these documents in a safety deposit box.
- Take preventive measures to protect your valuables. Alarm systems, proper storage and maintenance, and other options can minimize the possibilities for loss or damage to your treasured assets.
- Talk to your risk advisor about your coverage needs, and discuss the value, condition and use of your high-value assets. Your advisor can help you determine what should be insured and what might be better kept in a safe deposit box. Because insurance is not a one-size-fits all proposition, your advisor can review your coverage requirements to ensure you get the protection that best fits your circumstances. Make sure you clearly understand your insurance coverages and any exclusions that apply.
John is a Frost Insurance market president with more than 30 years of insurance experience, and works with clients to create risk management plans. To learn more, contact us at 866-227-2099.