3 important questions to ask when insuring your collectibles
By Reston Paquette, Assistant Vice-President Marsh Canada Limited 23 December 2019 1 min read
Whether you collect art, automobiles or antiques, finding the right insurance product to help protect your collection can be a challenge. Each collection is unique, which means off-the-shelf insurance products may not to suffice — even when they are available.
This seems to keep many successful people from buying insurance at all. A 2017 survey, from the global insurer Chubb, found that more than half of affluent individuals are worried that they are underinsured.
While being underinsured can be risky, being over-insured can also be a concern. Here are some questions to ask when deciding how to proceed with insuring your collections.
1. What Is Your Risk Tolerance?
No two collections and no two collectors are the same — and everyone’s risk tolerance is different. From this perspective, the first step to getting the right amount of insurance for your collection is to sit down and think about what it is worth — not in market terms, but to you personally. I’ve spoken with particular clients who don’t feel the need to insure wine cellars holding bottles worth more than $100,000. Some others feel compelled to insure collections with much lower values.
2. What Are The Related Assets?
If you decide that your collection does need insurance, it’s important to realize that there is more to your collection than the collectibles themselves. Wine cellars, for instance, also need racks, temperature control systems, and so on. Likewise, car collections require storage areas, security systems, and more. When considering the insurance required to help protect your collection, don’t forget to think about the accessories your collection requires to hold its value.
3. Who Has Experience?
For many successful individuals, initial advice comes from a private client advisor, who can help with many aspects of financial management and planning. An advisor with a reputable firm is a good start, but consulting a licensed insurance broker with experience insuring collections is preferable for obvious reasons. The advisor doesn’t necessarily have to be an expert, but they should be able to draw on help from subject matter experts and suitable insurance markets to ensure you have the right coverage and bring you peace of mind.