An ounce of prevention is worth a pound of cure. Indiana farmer Mike Black found that adage to be true when a barn fire swept through a barn at his farm. "We were real fortunate on insurance," Mike says.
About three years before the barn fire, the Blacks had changed their insurance coverage. At the underwriter's suggestion, and without fully understanding the importance of the change, they opted for blanket coverage.
"We itemized all of our equipment and put a fair price on every individual piece," he says.
The policy covered the actual cash value of the equipment. That would prove to be a crucial feature, but again, one Mike didn't fully appreciate at the time.
"That kind of coverage is something most farmers don't ever think to do," he says. "And when we did the initial inventory, yes, it was a pain. We were thinking 'This is a waste of time. Why bother?'"
The reason for the bother was readily apparent after the fire. Although the family's insurer wanted to settle the claim immediately, the Blacks worked with an independent adjuster during the claims process.
"He told us to get a clipboard, go out to that barn and itemize everything in it, down to a box of six-penny nails. You're going to have to prove everything was there," Mike says. "Then, he said, you go out and get estimated values on everything, see what it would cost to replace it."
It was, Mike admits, a time-consuming process.
"We did a lot of legwork. The fire was in April, and we didn't settle until November," he says. "But in the end, we got a very, very substantial amount. It more than doubled the company's initial settlement offer."
Collectors need to be clear on what exactly their coverage does and doesn't do for them, he says.
"When you get a policy, make sure you get a value on every piece at a reasonable price, and make sure you've got a blanket policy over and above," Mike says. "You don't want to be underinsured. They can penalize you for being underinsured. We weren't over-insured, but we were insured on the value."
Coverage Questions? Ask Your Agent
Wondering about the coverage on your collectibles? The only way to be sure is to talk to your agent. Insurance professionals encourage policyholders to be completely informed on their insurance coverage, what it does and doesn't include.
The way you use a piece is also a factor. If you use a vintage tractor to pull a mower at your home, that piece may be covered by your homeowner's policy.
Taking pieces to a show? Again, check with your agent on offsite coverage. Generally, a homeowner's insurance policy should cover pursuit of a hobby, but each company – and each policy – is different. Typically, a homeowner's policy includes a 10 percent extension for collectibles on display, but some companies specifically omit coverage for pieces exhibited at shows. FC