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The Risk of Stated Amount Coverage

Are your expensive items insured correctly?

If your home is burglarized, what is the first thing the thief would look for? Unquestionably, it’s jewelry. People with extensive jewelry collections are at a higher risk for theft. Therefore, homeowners’ policies have a limit on how much coverage is provided under the basic policy. But people who want or need more coverage can buy it by “scheduling” the items they want to be covered. However, this will result in paying an additional premium.

Furs, fine arts, firearms, stamp and coin collections, photographic equipment, and musical instruments have similar limitations and may also be scheduled.

If you list these items on your policy, you’ll be asked for the amount of insurance you want on them. The amount you choose is called the “stated amount.” The policy says that property is covered for the stated amount or the actual cash value, whichever is less. (The policy is written that way, so no one can insure a $5,000 ring for $10,000, for example, and make a profit if it is lost or stolen. If that were possible, there are many people who would arrange for a claim to happen.)

Here is why you need to be careful:

  • If you choose a value that is too low, you would not receive full value in the event of a claim.
  • If you choose a value that is too high and you increase your premium, you will never receive more than the property is worth.
  • Check your values annually. Values of some things, like diamonds, can vary from year to year. Others, like photographic equipment, may depreciate.

Up-to-date appraisals are a big help in establishing proper values and are also helpful in the claim settlement process. For more expensive items, the insurance company may require an appraisal.

There are many advantages to scheduling. For one, there is no deductible. Coverage is broader than provided by the basic homeowners. In addition, there is coverage for the loss of a stone on a piece of jewelry. But a little time spent in making sure stated amount values are accurate will help make sure you are getting your money’s worth in protection.

Don’t hesitate to reach out to the team at Capitol Insurance at 317-253-1155 or use the email box on your screen, if you have any questions or concerns! We love providing you peace of mind.