Can you ever insure personal property above market value?

July 30, 2020 10:42 AM

More specifically, are there any insurance agencies that will cover the sentimental or personal value of property, if the value is articulated in advance on a special rider? If so, what are the names of those insurance companies, and how do you go about getting coverage? How do you set a reasonable coverage amount?

Courts are increasingly recognizing that the sentimental and personal value of items should be taken into account when determining financial value, and this sentimental and personal value often exceeds the market value of the property. This is being called "owner value" or "intrinsic value" in the legal world. However, my sense is that insurance agencies have been slow to recognize this form of value. I am most interested in learning about the insurability of items that may have great sentimental value, but low market value, such as a family Bible or other heirloom. Any information would be most appreciated.

posted by mortaddams to Work & Money (5 answers total)

In the UK this is referred to as "Agreed value" insurance, my brother has it for his classic car and apparently it's not uncommon. The item can be covered for basically any amount you and the insurer decide between you. He didn't have to have the car appraised or anything too onerous, it was a phone discussion and some documents sent by email.

A quick search for "agreed value item insurance" gave this sales pitch from a company on the first result, specifically acknowledging sentimental value:

A Masterpiece policyholder lost a vintage Rolex whilst out sailing. The watch was of huge sentimental value as it belonged to his father. Understanding this, we offered to send out a diver to see if it could be located. Luckily, visibility was good and the watch was found. If it had not been recovered, we would have paid the agreed value of £35,000 with no deduction – letting the watch be replaced, or not, as the policyholder wished.

With an ordinary policy

With a standard insurer it’s unlikely there would have been any attempt to recover the watch, despite its sentimental value. Instead, the insurer would simply have offered the trade price of around £28,000, less any excess. A shortfall of over £7,000.

So I imagine similar policies will exist in other countries. I'd speak to a local broker as they'll know the market in your region.
posted by samworm at 11:08 AM on July 30, 2020

In the US, yes.

I carry something called a Personal Articles Policy, under which I cover some significant jewelry, my laptop, and my camera.

In the case of one watch (a Rolex I inherited), the insurance is for new replacement value, which is significantly more than the watch would be worth on the secondary market.

The electronics are insured for their original purchase value, which of course is drastically more than they are "worth" should I try to sell them. This means I am truly insured against loss on those items should they be lost, stolen, or destroyed, because the policy will pay me what I paid, not what the items are worth on the secondary market now.

Neither of these cases involve sentimental value, but my understanding is that this is the sort of coverage you'd seek in that case as well.

Note that it is not always possible to get such a policy. I think you generally have to be a homeowner, because it boils down to an "all hazards" policy and is thus more risky for the underwriters than conventional insurance, so they probably want to be making money off you on other premiums or something.
posted by uberchet at 11:13 AM on July 30, 2020 [1 favorite]

However, my sense is that insurance agencies have been slow to recognize this form of value.

They definitely have not. What they have been "slow" to recognize is allowing policy holders to pay premiums based on a lower value, then paying out a significantly larger claim because of "oh by the way...".

Like uberchet, I also have jewelry (all my wife really has from her late father besides pictures and memories) covered under an umbrella policy that's part of my homeowner insurance. We just listed out the items and what we thought they were worth, and our insurance company adjusted our premiums accordingly. They pretty much could care less what numbers we gave since they just looked up "how much to insure $50k ($40k higher than what the watch actually appraised for) Rolex from theft/fire in zip code blah blah blah" in their actuary tables, and charged us that premium.
posted by sideshow at 12:38 PM on July 30, 2020

My experience with such policies (old cars) is this:

• There will probably be some restrictions on use and/or storage, more so if the value being insured is outside norms. My cars: cannot be used for commuting; I have to prove I own a "real" car with "real" insurance on it; they must be stored in a locked garage. I doubt an insurance company would provide a specific rider on a common book, like a bible, that did not have intrinsic collector value, but if they did, they would probably limit its value to something semi-reasonable (if above market) and have conditions to its storage and use.
• You pay linearly for the coverage you get. In the case of my cars, it's roughly $1 per year per $100 of agreed value, last time I checked. You can insure your car to higher than market values, but only within reason. I could probably get them to give me $30,000 coverage on my old MG, but they would not grant me $100,000 without it being something provably rare (I assume this is to shut down a potential avenue of fraud). (As it is, I could replace it for $15,000 and would prefer to save $150 a year by insuring it for that amount instead of the higher value.)
• As with the anecdote about the watch and the diver, the insurance company often reserves the right to recover or repair the insured item in question (within reason, and in that case they asked). That may not be the outcome you'd want in case of a loss, so be sure to check your policy.

I think generally you're going to find that sentimental but irreplaceable items (photo albums, inscribed bibles, etc.) are going to be a harder row to hoe than items for which there is an established market like watches, cars, or china...and even then, the sky is rarely going to be the limit on valuation.

NB, I'm not an expert.
posted by maxwelton at 12:53 PM on July 30, 2020

I'm an insurance broker (in the US), though I don't deal with personal insurance much. The answer is yes, maybe, but probably no.

All of the above examples deal with items of actual, objective, researchable, value. Insurance companies will allow you to schedule these items for an Agreed Value on a Personal Articles Floater/Policy and not always require you to establish the value at the lower end. Stamp Collection worth $500? Sure ok, could very well be, not worth the time to figure it out. $50k? They're probably going to require you to establish that value. And there's the problem of insuring Grandma's Diary for $10k. If they ask you to establish that value, and the answer is, "we loved Grandma very much," they're gonna balk at insuring that.

However, if your answer is, "We have a high resolution digital images of all of Grandma's diary and we found an artist/calligrapher who says they can create a replica for $10k." They very well may agree to that.

Straight up insuring sentimental value insurance companies don't really want to do. You're asking them to pay in the event of your sadness. Goose the value upwards a wee bit on an object of value, sure that might happen. Or if you insured your two homes, 6 cars, boat, and numerous items of objective value with the same company, would a sympathetic underwriter agree to also add Grandma's Diary for $5k to keep the rest of your business? Maybe the answer is sure, why not.

You can get insurance for just about anything you can imagine if you're willing to pay for it. The right broker can probably find a guy in London representing a Lloyds Syndicate willing to insure Grandma's Diary for $100k at a cost of say $15-20k a year. That person will require a bunch of information about YOU to determine the cost, they'll be moderately interested in the kind of safe it's in, but more interested in the likelihood of you running a scam.

Find a good independent insurance agency. A "good" one for your purposes will have a "Private Client Practice" or something similar (insurance for rich people). Even if you don't talk to one of them, the broker you do talk to can and those people are more familiar with special situations/requests. Also, be sure to establish "agreed value" is truly that, cause it is not always.
posted by ixipkcams at 4:00 PM on July 30, 2020 [2 favorites]