Fine art collections, watches and jewelry, sports memorabilia, and wine collections saw a significant increase during the initial two years of the COVID-19 pandemic. Interest in the valuables and collections market hasn’t slowed and is forecast to increase further. The “collectibles industry will reach 692.4 billion by 2032, growing at an average rate of 22% annually.” (1) Collections are especially popular among prosperous individuals. With recent research from the Credit Suisse Global Wealth Report 2020 indicating that more than 70% of ultra-high net worth clients interviewed indicating they have a passion for collecting things like watches, jewelry, classic cars, rare wines, fine art, or sculptures. (2) A collection is representative of an individual’s unique interests and taste. McSweeney & Ricci’s Private Client Group advises clients of the importance of appraisals for collections and valuables. It’s important to protect your collections and the first step toward safeguarding it is having it appraised. Appraisals for collections and valuables help establish the value of your possessions, so your insurance agent can recommend the proper levels of insurance to protect them.
Collecting In Turbulent Times
The impact of COVID-19 has been all-encompassing with a shift to a remote then a hybrid workforce, supply chain disruptions, economic unrest and more. The COVID-19 pandemic created a global atmosphere of uncertainty.
During times of market volatility non-financial assets such as collections (which can ultimately be assigned a monetary value), can provide a feeling of safety for investors. In uncertain times, collectors find joy in securing the items they’re passionate about. In a recent article in Smithsonian Magazine, Psychiatrist Shirley Mueller author of “Inside the Head of a Collector” stated, “collecting provides solace and structure…Collecting is also about control. We can control our collections. We can’t control Covid.” (3)
In addition to the happiness factor, collections help to diversify an individual’s assets, which can provide an element of safety in uncertain times. Collections can serve as alternative investments and a store of value for future generations.
What is an Appraisal?
An appraisal is a written report giving the opinion of an item’s value at a given point in time. Without appraisals for collections and valuables, it is very difficult to prove an item’s value and fully recoup from the loss of that item. Imagine a scenario where a parent passes away and leaves their home and all its contents to their adult daughter. In the process of selling the home, the daughter donates most of the possessions inside to Goodwill, only to find out later that a painting and vase could have been worth hundreds of thousands. Having the items inside the home appraised would have alerted her to their worth.
People are passionate about the things they collect. A person’s collection is reflective of their unique interests and tastes. As such, collections have both emotional value and monetary value for the person collecting them. An appraisal represents an expert and impartial valuation based on facts rather than a sentimental attachment.
Three Reasons to Consider Getting Appraisals for Collections and Valuables
- Insurance: Your insurance agent will need to know how much your property is worth in order to recommend the proper levels of collections and valuable items insurance to protect it. If your possessions get stolen, lost or damaged there needs to be enough coverage maintained, for the insurance company to reimburse you for the value of your items.
- Inherited Items: If you have inherited your collection from someone you will need an appraisal to help calculate capital gains taxes later if you decide to sell the collectibles. An appraisal will determine the “date-of-death” value, which describes the “fair market value of each estate asset at the time of a decendent’s death. This includes statement values as of that date for bank, investment, and retirement accounts.” (4)
- Selling Your Items: If you decide to sell all or part of your collection, an appraisal helps you know how much to charge. Any potential buyers will also be interested to know how the item’s value was assessed. An appraisal can also guide a collector in their decision whether to sell or trade their items or if they want to hang onto them.
How to Find a Professional Appraiser
When it comes to assessing your valuables, it’s best to contact a certified and accredited appraiser that specializes in the kind of item you collect. You may think the best place for an appraisal is wherever that type of valuable is sold, a jewelry store for a jewelry or watch collection or an antique shop for a collection of antiques. However, it is best to obtain an appraisal from an expert who has no active interest in purchasing your item/s.
Our partners at Chubb recommend consulting an appraiser that belongs to one of the three major appraiser organizations: The Appraisers Association of America (AAA), American Society of Appraisers (ASA), or the International Society of Appraisers (ISA). Membership in one of these organizations ensures that the appraiser has taken courses, had years of experience and adheres to a strict code of ethics. (5) Chubb also cautions against using appraisers who charge a fee based on your item’s value and favor those that charge a flat fee or hourly rate. The select insurers we represent such as Chubb, PURE, Cincinnati, Hanover Prestige, Berkley One and Vault, have carefully compiled a list of vetted professional appraisers and our Private Client Risk professionals can help select the right one for your specific situation.
Same Item, Different Values
Depending on the reason for the appraisal, the same possession can have different values. Standard values include retail replacement value and fair market value.
- Replacement Value is typically used for insurance purposes, contains a detailed description of the item and is the highest amount it would cost to replace a piece with another of similar quality, age, appearance, and condition in the event of a loss. (6)
- Fair Market Value is typically used for estate planning, estate tax purposes, equitable distribution or tax-deductible donations. It reflects the price at which property would change hands between a willing buyer and a willing seller.
Is My Collection Covered by my Homeowners Insurance
High value homeowners’ insurance protects your home and the property within it from different types of losses such as weather-related damage, theft or fire. However, most home insurance policies limit or exclude coverage for collections of different types or artwork. So, if someone breaks into your home and steals your Patek Philippe watch or your air conditioner breaks and your signed Georgia O’Keeffe lithograph or autographed Ted Williams Baseball, your homeowners’ insurance will most likely not reimburse you the full appraised value of those items. Only a dedicated collections and valuables items insurance policy can help reimburse the full value of your treasured items from a range of losses.
What is Collections and Valuable Items Insurance?
Because most homeowners’ insurance limits or excludes coverage for valuables and collections, McSweeney & Ricci’s Private Client Group recommends protecting your possessions with a separate collections and valuables items insurance policy (also known as valuable personal property insurance). Whether you own a collection of fine art, an extensive jewelry collection, sports memorabilia or a carefully curated wine collection, your treasures are worth more than money. Insuring your collection provides reimbursement for the agreed value after a covered loss and can also provide peace of mind about your cherished possessions. Our team provides customized collections and valuables coverage through our premium partner carriers (Chubb, PURE, Cincinnati, Hanover Prestige, Berkley One and Vault).
Collections and valuable items coverage can safeguard your special items from losses such as:
- Damage occurring in transit, while being restored, during repair, or while on exhibit
- Natural Disasters
- Accidental Breakage
Your personalized collections and valuables items insurance can include:
Agreed Value: we partner with you to gather professional appraisals and determine the value of your possessions. Agreed value ensures your special items are reimbursed 100% for an agreed fixed amount without depreciation after a loss.
Worldwide Protection: Your collection is protected wherever it is in the world. If your diamond necklace is stolen while vacationing in Nice, France you’ll have peace of mind you can replace it with a piece of like kind and quality.
Mechanical Breakdown: If your collection of fine wines becomes damaged after a mechanical breakdown where they’re stored, you’ll be reimbursed for their value.
Your coverage is tailored to your individual needs, budget and collection. Choose from coverage for newly acquired items, itemized coverage for individual items, blanket coverage for large collections of many items, protection from market increases and more.
Let Us Help Protect What You Collect
Your high value homeowner’s insurance protects your home. Take steps to protect the possessions within your home from loss and damage, including your collection/s. Our risk professionals have expertise protecting different types of collections including, jewelry and watches, fine art, wine, antiques, collector cars, rare books, stamps, coins, autographs and sports memorabilia and more.
Our team will offer guidance on how to properly store your collection, inventory management and ways to avoid loss. If you do experience a loss, our in-house claims department ensures your claim is handled as quickly as possible.
Your treasured items deserve insurance protection as unique as they are. We offer concierge-level service and access to premium insurance companies who specialize in protecting accomplished individuals and families.
For additional information on appraisals for collections and valuables or collections & valuables insurance to protect your collection, contact the risk professionals in McSweeney & Ricci’s Private Client Group by calling (844) 501-1361 or request a complimentary quote here on our website.
- Enormous Demand for Art, Anime, Sports, and NFT (globenewswire.com)
- Collectibles: An integral part of wealth (deloitte.com)
- During the Covid-19 Pandemic, Avid Collectors Find Joy in Their Prized Possessions | Arts & Culture| Smithsonian Magazine
- How to Calculate the Value of Your Estate (thebalance.com)
- Why You Need an Appraisal for Your Collectibles | Chubb
- Appraisal & Auction Services | Skinner Auctioneers (skinnerinc.com)