Should I insure my farm antiques and collectibles? It's the proverbial $64,000 question of the collecting market. And the answer is entirely personal.
If you have the collector's 'gene,' as Dan Walker, owner of Collectibles Insurance Services, Westminster, Md., calls it, you had better give this serious consideration. "You've either got the 'gene' or you don't. If you've got it, you're going to keep collecting," he says.
When you keep collecting, values add up. A hundred dollars for a toy here, $50 for a sign there - and soon you could have a collection worth thousands of dollars.
Or what about that old, rusty tractor you picked up 10 years ago for $500? According to Roland H. Lunser, owner of U.S. Power Antique Tractor Insurance, East Aurora, N.Y., with the time and money you've put into it, it's a remarkable sight and probably worth many times more than what you paid for it.
In all seriousness, gene or no gene, collectors are a unique breed, and they hold their collections dear to their hearts.
When something is precious to you, and you can't bear the thought of losing it or seeing it damaged, would recovering its value to somehow replace or fix it help ease the pain? Then let's talk insurance.
Finding the Right Insurance
Okay, so now you must decide on an insurance carrier. You have options, and like anything else that's important, it's best to shop around. Basically, you have:
Specialty Insurance: That's an insurance policy that can cover personal property (and liability for tractors) specifically designed for antique tractors, other antiques and collectibles, and offered by companies dedicated to these niche markets.
Homeowner/Farmowner Insurance: These are policies that can cover personal property and liability. However, homeowner insurance typically excludes liability coverage or property damage for motor vehicles or all other motorized land conveyances off premises.
Inland Marine Insurance: This can broaden homeowner or farmowner policies and is designed specifically for precious, sentimental, collectible and other valuable personal items. It, like specialty insurance, provides coverage for more risks than most homeowner or farmowner policies, but usually not liability.
Specialty insurance companies focus on memorabilia coverage, or an insurance program for antique tractors, claim to provide certain advantages.
In their unique niche-market roles, they claim to:
• Offer more-inclusive, less-expensive, specifically tailored physical damage insurance coverage.
• Respond to claims more efficiently and accurately because they insure to the collectible value of the item.
• Concentrate their attention and support on the collectible niche markets they serve.
Some memorabilia coverage requires no inventory list, just a brief summary of the type of collection, except on items that exceed $5,000 in value, but it depends on the insurance agency.
Some antique tractor programs also provide liability coverage for off-premises use at shows, parades and static displays. These programs often require year, make, model, serial number and value of each tractor insured.
Most homeowner and farmowner insurance companies offer inland marine insurance, but typically not liability coverage.
Often collectible insurance coverage has one major advantage for collectors: It provides the convenience and comfort of having all personal property insurance under one carrier represented by a local and usually familiar agent. In comparison to the specialty insurance:
- Inland marine divisions also depend on industry experts in the individual categories of collectibles for loss valuations.
- Under a 'blanket policy,' inventory is not required. A written record and photos (keep them somewhere outside the home) help streamline the claim process.
- No professional appraisals are required, except on items valued more than $5,000.
The bottom line is, you must shop around, and when you compare, be sure you have concrete values on your collectibles and thoroughly understand what is covered in any policy.
What's included in any type of coverage does depend on what you are doing with your tractors or memorabilia. If you are on the road as a dealer or drive collectible tractors in parades, for example, your costs could be higher than if you simply enjoy a collection in your home.
Mr. Lunser, who has been in the ag insurance business for 40 years, was frustrated in his own efforts to find good, affordable coverage for his own antique tractor collection.
"I've been working on providing an affordable antique tractor policy for years," he says. "I tried to work out ways for insurance to cover my own collection, and I've also talked to others who need it. Finally, it's done - a legitimate, quality, affordable package policy just for antique tractors."
In Lunser's experience, the most valuable part of antique tractor insurance is liability coverage. "If a collector takes his equipment off premises, he is responsible for his liability," he says. "That could mean a child stepping out into your path in a parade or someone getting injured while you are using your tractor at a show. Collectors are taking chances if they are not insured for liability. Accidents and lawsuits are waiting to happen."
In general, antique tractors are eligible for coverage under the following definitions:
- They were manufactured more than 20 years ago,
- They must be complete and in running condition, and
- They must be insured for realistic, current market value.
Under many programs, tractors are not insured for tractor pulls.
Memorabilia, too, has its own special considerations. One advantage of specialty collectors insurance may be market familiarity when determining replacement values. "Condition is important in terms of how much is paid for a loss," says Walker. "We can find the source of the material, and we know the experts who can help us make a clear assessment. There is a lot more of a paper trail than most people realize."
He adds, "As supply diminishes, demand builds." The Internet and eBay, have played important roles in opening up the hobby to a broader market.
Many insurance companies do not place any age limit on the term "collectible memorabilia." Rather, they consider the scarcity of items, demand and whether something truly falls into the category of being collectible.
Basics of Collection Coverage
Basic homeowner or farmowner coverage is less broad and may exclude property and liability off premises, but the memorabilia, antique tractor and inland marine policies mentioned in this article have quite similar coverage and exclusions for protecting collections as property. Keep in mind there are variances, but basically, coverage includes:
- Premises - such as fire, lightning, theft, vandalism and windstorm (also breakage and Internet fraud under Walker's collectible insurance policy).
- Travel - including fire, theft, vandalism, windstorm, plus upset or overturn in transit.
- Shipping and mailing - applicable with most shipping companies.
- War and nuclear events
- Government confiscation
- Insects and vermin
- Dampness, wear and tear, and gradual deterioration
- Mechanical breakdown (for tractors).
Finally, be aware of important quality ratings assigned annually to insurance companies. One of the industry's leading sources for ratings is AM Best, an independent company that provides opinions on an insurer's financial strength and ability to meet ongoing obligations to policyholders. Ratings opinions range from "A++" (superior) to "F" (in liquidation). Anything in the "B" category and below is considered "vulnerable." Ratings from "A++" to "B+" are considered "secure."
Cost: Compare apples to apples
Cost may be one of the advantages of purchasing insurance through a niche-market insurance company. Weyhrich says he prefers that collectors consult individual agents for costs, but representatives of the two specialty companies interviewed for this article did provide average annual premiums lower than State Farm quotes based on the following information:
Memorabilia Coverage: For example, the average premium based on an antique toy collection valued at $5,000 with no liability coverage and no deductible is $21. Collectibles Insurance Agency requires no minimum value for coverage.
Antique Tractor Coverage: For example, the average premium based on three restored antique tractors valued at $10,500 with liability coverage ($20 per tractor) and a $250 deductible is $107.25. U.S. Power Antique Tractor Insurance requires a minimum annual premium of $100.
When shopping, it is wise to check on exact inclusions and exclusions of any policy. Some companies that offer tractor insurance include the CWG Collector Car Program, Chubb Collector Car Insurance, Hagerty and American Collectors Insurance. Factors that affect price include such considerations as storage location, protective safeguards and prior loss history. FC
- Native lowan Jules Irish is a freelance writer in the Quad Cities.