Your home insurance doesn’t just cover the cost of rebuilding your home. There’s also ample coverage for your personal belongings if your policy is structured well. However, coverage for certain types of items may be subject to a dollar limit, both by category and by item. This means you might not be as covered as you think – even if you think you thought of everything when choosing a coverage limit. Fixing your policy to better protect your valuables is easy though. Let’s discuss some of the considerations for covering paintings, artwork, and sculptures so you’ll know if you need to make some adjustments to your policy.
Coverage limits and deductibles
The types (and value) of art and collectibles that people own can vary widely, so coverage requirements vary accordingly. A standard homeowners insurance policy does provide some coverage for collectibles or artwork, including paintings and sculptures, but there are some significant limits that may require adjustments to your policy to ensure full-value coverage.
First, your policy covers all your personal property up to the coverage limits you’ve chosen. However, several categories of items have lower coverage limits. Artwork is among these categories. For example, if your policy states that your personal property is covered up to $150,000, that number is an aggregate but doesn’t specifically apply to the special categories of valuables, such as jewelry, furs, artwork, and similar items. Depending on how your policy is structured, your coverage for a single piece of artwork might be limited to $2,500, for example. The actual single-item coverage limit or your policy might be higher or it might be lower – but that single piece of artwork isn’t covered up to the full $150,000 used in the example.
Coverage limit amounts for valuables vary by insurer but tend to offer one limit for the loss of a single item and a separate limit for the loss of several items in the same category, the type of loss that might happen in a fire. The category limit is usually double the single item limit, so $5,000 would be the category limit in this example with a $2,500 single-item coverage limit.
As with all your personal belongings, you’ll want to keep records of what you have and how much it is worth or how much it cost. You can build a home inventory with a digital camera to record the items you own. Receipts are useful as well to verify the value, so as you acquire new items, take a clear picture of the item next to a receipt. Save these photos to cloud storage to prevent losing your records if your home is damaged. Depending on how your policy is structured, your coverage for some personal property may be for actual cash value, meaning the insurer will adjust the value for wear and tear due to age. There are ways to insure your valuables for their full value, however, which we’ll discuss next.
Scheduled item coverage
As you can see, there may be some gaps in coverage on a standard home insurance policy if you have valuable items. The solution to this coverage gap is called scheduled items coverage and there are two primary ways to insure your valuables or artwork for their full value.
Many insurers build an option to add scheduled items directly to your home insurance policy. A scheduled item simply means that a specific item is being insured for a specific dollar amount. So, instead of generic coverage for “artwork”, you can purchase specific coverage for a specific piece of artwork, or for several, but each one is a separate scheduled item.
The other option offered by some insurers is a personal articles policy. This policy can be managed separately from your home insurance policy but offers the same benefit of coverage up to the full value of the item. For example, your home insurance policy might cover up to $150,000 for your personal property but your personal articles policy can provide separate and specific coverage for $50,000 worth of itemized valuables and artwork. Be aware that you can’t make a claim on both policies for the same item, however.
Whether adding your artwork as scheduled items or purchasing a personal articles policy, your insurer will need to verify the value. Typically, they will need a recent appraisal or a recent receipt. Appraisals (as opposed to receipts) are often required for artwork and provide you with an accurate description of your artwork and its worth.
Another benefit to using scheduled items coverage to protect your artwork is that many insurers provide the option for choosing no deductible or a reduced deductible. Home insurance policies seldom have a deductible of less than $1000 and many have deductibles that are based on a percentage of the total coverage amount, sometimes reaching into 5 figures. In simple language, the deductible is the amount you agree to pay before the insurer has to pay anything toward a claim. So, if your artwork is worth $3,000 but isn’t a scheduled item, your policy might only pay $2,500 – less your deductible – which could lead to no payout on a covered claim or only a small payout, depending on how high your deductible is. Using scheduled item coverage or a personal articles policy to specifically insure valuables is a much safer way to insure your artwork, paintings, or sculptures.
Understanding the appraisal process
An insurance appraisal works much like an appraisal you’d get for a piece of jewelry, but it needs to meet the insurer’s underwriting requirements. Typically, insurers will need an appraisal that was done in the past 3 years that describes the item in detail. A photo often accompanies the appraisal. Because artwork can appreciate or can rise rapidly due to market changes, like the death of the artist, you’ll want to keep your appraisal updated and adjust your coverage as needed. If you have a painting that was worth $10,000 and a sudden demand for work by that artist drives the value up to $20,000, you’ll need to adjust the coverage amount (and get a new appraisal) to be covered for the new value of $20,000. Expect your premium to be a bit higher because you are insuring for a higher value. Some insurers may provide the option to insure for a higher amount than the appraisal, allowing for an appreciation in value, but be sure to read your coverage and don’t assume this option is built into your policy.
Your home, meaning the building and its attached structures, is usually covered for all risks except those specifically excluded on your policy. Coverage for your home’s contents is often more limited – not just in dollar amount – but also in regard to which risks are covered. For the most common type of policy, an HO-3 policy or its equivalent, you’ll usually find coverage for personal property losses due to the following perils:
- Riot/civil commotion
- Vandalism/Malicious Mischief
- Glass Breakage
- Pipe Freezing
- Volcanic Eruption
- Falling ObjectsWeight of Ice, Sleet, Snow
- Electric Current
A “peril” is a risk. The list of commonly covered perils is extensive but may not cover as many risks as the coverage for your home itself. The covered perils list also doesn’t seem to include dropping your new sculpture down the front steps while bringing it into the house or tripping over your newly acquired painting before you can hang it. There are still a few risks that aren’t covered. Some insurers offer an option to provide all-risk coverage for both your home and your belongings. With this type of policy, which is less common, all risks are covered except for specific exclusions. Regardless of your policy type, some common exclusions can affect your coverage as well.
Homes can be rebuilt and furnishings can be replaced, but many times artwork can be irreplaceable. It’s important to understand some of the common (or less common) exclusions that may affect your coverage. Where theft is covered for artwork, there may not be coverage if the artwork is stolen from someplace other than your home. There may also be a hole in your coverage for “mysterious disappearance”. Imagine coming home and there is no sign of forced entry, yet your artwork is missing. Insurers might deem the loss to be a mysterious disappearance and may not cover the loss.
Some other exclusions can affect not just your artwork, but all your personal property as well as the house itself. Floods and earth movement are the primary culprits. These risks usually aren’t covered by a home insurance policy. Separate policies can be purchased but also have some practical limits that can prevent full coverage. Consider risks when putting your artwork on display. If you’re near water or in a low-lying area, make sure your artwork is high enough to be safe from water.
Among the other common exclusions are: Ordinance of Law, Governmental Action, Nuclear Hazard, Power failure, War / military action, Inherent defects, Vermin, Intentional Loss, and others.
As with many things in life, an abundance of caution can help prevent costly losses. If your artwork, paintings, sculptures, or other valuables aren’t specifically insured as scheduled items, they may not be fully insured. Adding your valuables as scheduled items provide much better protection and help to ease the claims process if you do have a loss.