There are many categories of property that have special limitations under your Homeowner Policy. Often, these items that have extremely limited coverage are among your most valuable items in terms of cost or in terms of sentimental value. Let’s discuss what property is affected by these limitations and how the coverage is limited.

Limited By Value

The bulk of the items that final into the Special Property category are limited under the policy coverage by value. In other words, they are covered by all the same perils to loss as any other personal property that you own, but are limited in how much the policy will pay for the item. The actual dollar limit varies depending on the policy and insurance company, but in all cases, the dollar limit is probably lower than the actual value or cost to replace the item.

Examples of property that fall into this limited by value situation include:

• Money, banknotes, bullion, gold, silver, coins, medals, scrip, stored value cards, and smart cards.
• Securities, accounts, deeds, evidence of debt, letters of credit, notes, manuscripts, personal records, passports, tickets, and stamps.
• Watercraft of all types, including their trailers, furnishings, equipment, and outboard engines or motors.
• Trailers and semi-trailers not used with watercraft.
• Property on or off the residence premises used primarily for business purposes.
• Electronic apparatus and accessories while in or upon a motor vehicle.

Limited By Perils

A smaller group of items that fall into the Special Property category are limited under the policy for the perils of theft, misplacing (sometimes called mysterious disappearance), or losing for a token dollar limit. Of course, for the items listed, theft is the most expected cause of loss for the policyholder.

Examples of property that is limited by peril include:

• Jewelry, watches, furs, precious and semi-precious stones.
• Silverware, silver-plated ware, goldware, gold-plated ware, and pewterware.
• Firearms and related equipment.

Other Potential Problems

You may own other personal property that is not technically limited by peril or value that deserves special treatment as well. For example, antiques are covered under your homeowner policy, but not very well.

The problem is that the loss settlement basis in the policy simply does not work well for antiques. In the loss settlement provisions, they will not compensate you for the value of the property’s rarity, antiquity, or intrinsic value. This loss settlement problem applies to:

• Antiques
• Collectibles and Collections
• Fine Arts

Other items you own that are subject to perils beyond coverage under the homeowner policy are:

• Musical Equipment used professionally may be limited by the business purposes clause in the policy.
• Camera Equipment that you expose to unusual perils may not be covered under the policy. It may surprise you to know that “my camera fell off the cliff while I was mountain climbing” is not always covered.
• High end sports equipment, such as skis and golf clubs you check when flying, may not be covered for breakage due to rough handling.

What’s The Solution?

Once you identify the personal property items you own that may be affected by these limitations in coverage or valuation within your homeowner policy, we can recommend the best solution for you.

We have several options for you to consider.

Do You Have To Have Appraisals For Special Property?

You do not have to get appraisals for most of the property items that we have mentioned in this article. While this may vary among different insurance carriers, you typically only need an appraisal for jewelry. The appraisal should be current (less than five years) and include a detailed description of the piece.

It can be expensive to get appraisals and you may be hesitant to leave a jewelry item overnight with an appraiser. We have an excellent contact locally for our clients who will not hold your item overnight and have a flat rate per item (rather than charging a percentage of the value of the item). For most all other special property, a descriptive list with a value is all you need to get special coverage.

Personal Articles Floater

For most of the various properties we have discussed, adding specific coverage for each item through a personal articles floater or endorsement will solve the coverage and valuation issues we have outlined.

Coverage

When insured specifically on the policy, your special property item is now covered for “special perils”, which is the broadest coverage that they offer. In short, this means that all direct physical loss is covered unless they specifically excluded it in the policy. These perils include theft and mysterious disappearance or loss, which is especially important for jewelry and watches.

Valuation

When listing items to be covered on a personal articles floater or endorsement, you select a value for the insurance. For a few types of property (jewelry), the insurance company may ask for an appraisal. For most types of property, the insurance company assumes that if you are the collector, you have reasonable expertise and know the value of the item.

Loss Settlement

The loss settlement for a personal articles floater or endorsement is typically based on the value listed or the amount needed to replace the item with similar goods. If you over-insure an item, you may not get the full value listed on the policy, but they will compensate you with an amount needed to replace the item.

Special Form – HO 5

Another effective way to make sure you have the best coverage for your personal property is to purchase an HO-5 version of the homeowner policy rather than the standard HO-3 version. Some carriers have an endorsement package that is equivalent to an HO-5.

When you do this, you change the perils that you are insuring from Broad Form Perils (named perils) to Special Perils (named exclusions). The HO-5 is much broader and is an inexpensive upgrade to your policy.

Insure Your Special Property With G.S. Newborn & Associates

At G. S. Newborn & Associates, we want you to have the coverage that you need, and we want you to understand the personal coverage that you buy.

Contact us if you have questions on your special property items.

– Susan Newborn, ACSR
Personal Lines Manager