Safe, Not Sorry

Insure Your Collection .. Before It's Too Late

By Tomma Lou Maas

Pete Hartman protected his prized construction toys from theft by placing them in a secure room in the basement.

He had installed heavy glass shelves along the walls to display his collection of Caterpillar crawlers, some of them quite rare, and he kept the room locked. However, when the top glass shelf split under the weight of heavy toys, many of his crawlers were damaged in the crash. Plunging through three other shelves of glass, the accident wiped out 10 feet of toys. Some pieces were damaged beyond repair; others were scratched and marred.

Why Insure Your Collection?
Theft, accidents, fire, smoke damage, breakage from handling and numerous other unforeseen events are reasons to insure your action figures, teddy bears, tin toys, toy pistols or whatever you collect.

In Hartman's case, insurance would have recovered his investment costs and even the appreciated value of his crawlers. To be sure your toy is covered for its appreciated value, however, and not just its purchase price, insurance policies must be updated with current market prices. Hartman, however, did take steps to insure his toys before his loss occurred.

Many people feel more secure knowing their collections are protected by insurance, security systems and other devices that fit their needs and budget. The trend is toward insuring, and a collector should be certain that his policy gives him good coverage.

Bob Carlson, who was an agent with American Family Insurance, explained that there is a difference in getting coverage for a "toy hobby" and a "toy business." Although the hobbyist's collection can be covered under a homeowner's policy, the businessman's collection must be insured on a separate commercial policy.

Those who collect for their own pleasure fall into the first category. Dealers, who buy and sell toys extensively, may need the commercial policy, particularly if they travel frequently and want coverage for the toys in transit. Rates for business and commercial policies are higher than a homeowner's policy.

Many collectors opt for a rider on their homeowner's policy since the latter normally limits the dollar value for personal items such as toys, antiques or jewelry. The rider, a separate policy attached to the homeowner's, insures specified items for a stated amount.

According to Scott Cessna, an agent with Danish Mutual Insurance, a rider on the homeowner's policy is a good way for collectors to insure toys, particularly since it covers breakage, and a homeowner's policy does not. The main perils covered under a homeowner's policy are theft, fire, wind and storm.

Cessna also says that a rider gives the collector two additional benefits. It gives the insured additional coverage, and it "adjusts a loss before it happens." This means that both the insured and the agent agree on the value before the loss occurs. Although some insurance companies do not insure paper collectibles, the company will insure baseball cards and other paper items.

He also acknowledged that homeowner's policies now offer limited coverage for business property, ranging from $1,000-$2,500 and would benefit dealers who need only a small amount of business inventory coverage.

The collector who has a large and expensive collection of dolls, trucks, trains, or other toys, however, should consider a stand alone policy. American Collectors Insurance of Cherry Hill, N.J., which serves primarily collectors and not dealers, offers one of these. A company representative said the company's program was developed to answer collectors' insurance needs when a homeowner's policy cannot. An appraisal is not required and the paperwork is simple, with applicants filling out a one-page questionnaire.

The Cost of Insuring
American Collectors Insurance caters to the serious collector, and they offer policies to cover large and expensive collections such as dolls, trucks and trains. Their policies begin with coverage for toy collections valued at $10,000. Such coverage costs $75 per year. Even if a collector has toys valued only at $7,500, this policy could be a good buy since it permits additional purchases during the year up to the $10,000 limit. This blanket policy also covers individual toys valued up to $2,000 and needs no additional information; if a toy exceeds the $2,000 value, American Collectors will schedule the item on the policy for an agreed amount at no additional charge.

Costs for insuring under a rider on a homeowner's policy vary at a rate per $100 or per $1,000 for the value of the toys. A collector should check with his agent on rates for a particular company.

When are you considered a dealer, and can you be insured?
Insurance companies define toy dealers by the profit they make from selling toys in a year, and each company may differ on this ruling. In general, however, if a collector makes $1,000 or less trading toys, he can get insurance protection under his homeowner's policy; from $1,000-$5,000, he should add a rider; if he makes more than $5,000 in a year, he needs a commercially-written business policy. Again, the collector should check with his agent for company guidelines.

Damon Davis, an agent with American Family Insurance, explained that rates per thousand dollars of coverage vary according to how secure the toys are. The more secure a collection, the lower the rates. For example, collections housed in a brick building in town will have lower rates than for those housed in a wooden structure in the country since fire protection is better. Burglar alarms, security lights and dead bolts can also lower insurance rates.

To get your collection insured, you need to give your insurance agent an inventory sheet listing the toy, its value and a description or photo of the toy. Some agents will require a third party confirmation on values. This can be a buyer's sheet, catalog prices, price guide pages, receipts for payment, or other sources to substantiate the value. Once the collector has this inventory completed, the insurance agent will be able to endorse the items on the insurance policy.

Getting an appraisal of the collection is not always necessary when good price sources are readily available. Collectors who stay on top of price trends by attending auctions or reading current auction results are just as able to determine toy prices as an appraiser. To substantiate these values for the agent, however, the collector should provide a buyer's sheet or price guide data.

If, however, you seek the services of an appraiser and don't know where to find one, there are several places to turn. One resource is the American Society of Appraisers in Washington, D.C. Their toll-free number (1-800-ASA-VALU) can connect you with a personal property appraiser in your part of the country. According to Donna Reid, director of public relations, their members are certified appraisers who have passed rigorous ethical exams.

Charges depend on the time it takes to complete an appraisal, including research when needed. Reid warned that a collector should never be asked to pay the appraiser a percentage of the value of the toy (e.g., 10 percent of a toy valued at $5,000). This would be an unethical approach.

Why Toy Collectors Don't Insure
One agent with American Family Insurance states that several of his clients had not gotten their collections endorsed because they had not completed their inventories. When he told them to have the collections appraised, they still resisted, saying they did not know a reputable, trustworthy appraiser.

Many collectors express this sentiment. In fact, many collectors shy away from talking about their toys to strangers. Incidentally, this desire for privacy is one of the best ways collectors help protect their dolls, tin wind-ups, teddy bears, trains and any other toy which can be traded or sold in the hobby.

Collectors should not hesitate, however, in putting together their own inventory and appraisal sheet, nor should they procrastinate in insuring their toys. Just follow the instructions above, and if you still don't feel confident, contact a toy auctioneer who specializes in the type of collectible you have. Price guide preparers are also good consultants for establishing values of toys, and trade publications are good sources for locating these people.

Updating Your Coverage
Once the collector has his inventory and policy endorsement, he should keep the values current. The list should be updated at least once a year, or twice a year if many items are added. Or, the policy can be updated whenever large purchases are made. If toy values appreciate over the years, the policy should be changed to reflect the increases.

Collectors who seek coverage for expensive toys can arrange with their agents to have coverage from the moment of purchase. Some policies permit automatic coverage. In other cases, you may need to call your agent and say, "I'm thinking of buying this, and I'm probably going to pay this amount, if I get it. Can I be covered right away?"

Most auto policies do not cover items such as toys; however, personal property stored in the car or in transit is usually covered by the homeowner's policy. Some homeowner's policies and riders, though, only cover these items on the home premises, and a collector should know what his policy covers. Those who transport their valuable toys should adjust their policies to cover their risks.

What to Do in Case of Loss
In case of a loss, most insurance companies will probably make a settlement in two weeks. Cessna says, "Some of our companies give us draft authority up to $1,000." In those cases, if a toy is lost or stolen, the agent can write a check for the loss the same day it happens. If the company has an adjuster investigate the loss, it could take up to four weeks for a settlement.

According to Cessna, an insurance company may choose to replace the lost or damaged toy rather than pay out a cash sum - if the company can find the same toy for an amount less than the toy's insured value. The key, however, is finding the same toy, in the same or better condition. It is the company's prerogative to pay the lesser amount. However, if the insurance company replaces the toy, rather than making a cash settlement, the agent should communicate this to the collector to ensure that the collector will be satisfied with the results.

Tips for Protecting Your Toys
In addition to your inventory list, other records can help protect a collection. Video tapes and photographs are useful to verify what is in a collection and can substantiate the condition of the toys; duplicate copies should be kept in a safe place, a deposit box or fireproof safe.

Photos can also prove your ownership of the toy. A small toy manufacturer used published photos of their miniature pedal cars in a lawsuit against a much larger company to prove it was the original manufacturer.

Marking toys is another way to protect them against theft. Some collectors use pens with invisible ink. These labels show up under ultra-violet light; numerous products are on the market.

Collectors should also consider the risks to which they expose their toys, such as unsafe shelving and lighting which will fade their teddy bears, dolls and paper collectibles. Even visitors who unthinkingly play with toys may break or damage them or dirty them with fingerprints.

Fire can damage a collection even though it never touches the toy room, and heat and smoke can bake a film onto the toys which cannot be removed. Also, extreme heat or cold can damage toys, and a collector should be careful not to store plastic or other toys in an attic or a room where temperature fluctuates widely.

Be Safe, not Sorry
Although you may not expect a tragedy to befall your collection, insurance can help you cover your loss. It won't make you feel better to have lost your prized toys, but it will help you rebuild your collection after the disaster has passed.

To obtain more information on getting an appraisal or insuring your collectibles, you may want to contact the following resources.

American Society of Appraisers
P.O. Box 17265
Washington, DC 20041
800-ASA-VALU / 703-478-2228

American Collectors Insurance
P.O. Box 8343
Cherry Hill, NJ 08002
800-360-2277

Appraisers Association of America
386 Park Ave. S., Suite 2000
New York, NY 10016
212-889-5404

Danish Mutual Insurance
Scott Cessna
318 Main St.
Cedar Falls, IA 50613
319-266-2644

International Society of Appraisers
16040 Christensen Rd., Suite 320
Seattle, WA 98188
206-241-0359

John P. Slade Insurance Agency
Fall River, MA
508-676-8283

The preceding material was written by Tomma Lou Maas. These are the opinions of the author, not the opinions of eBay, and therefore eBay does not validate the accuracy of or endorse these opinions.