A topic that is too often neglected in our personal lives... is the monetary "worth" of our collections of personal property.
To think of it objectively or look at it like this... Imagine you are in an open field looking at a nice and neat gathering of all these great things someone has gathered throughout a lifetimes journey. You seem to like the selection and agree it is some quality gear.
Using a neat velvet rope barricade there is indeed an owner of this quality stuff nearby and an insurance person too to make sure all the gear is safely guarded.
Everything seems in orderly enough.
There is art, jewelry, guns {super neat old antique type of guns mostly but some new ones too!}. There's some great vintage and new electronics, very nice clothing and shoes, there are stacks and stacks of CD's and hard-drives with digital music files stored on them, there are several great musical instruments such as a 1958 Les Paul guitar... you get the idea, there's some great stuff there!
Now... all of the sudden the entire gathering easily and effortlessly catches on fire!
The entire gathering is reduced to ashes and what is left that would not burn completely is... well, not in very good condition.
The devastated owner visits with the insurance staff and begins the process of compensation for replacing the great stuff as quickly as possible. The insurance folks are kind enough and do what they have been paid to do and compensate the owner for the "actual value" of the stuff which they are somewhat aware was in the gathering. But unfortunately the insurance folks don't know what was "actually" in the gathering they only have a rough estimate based on descriptions from the owner. They rely heavily on the owner to inform them of the stuff that was part of the collection.
When the "level" of financial reparation has been reached based on the policy value {pre-determined levels for jewelry, pre-determined levels for household goods ie: electronics, clothing etc..., pre-determined levels for the guns, pre-determined levels for all the art works etc...} there arises a problem... and a big problem.
The owner says there was more jewelry and artwork in the gathering than was compensated for!
And... the artworks and jewelry are "worth way more" than what compensation shows. The owner simply cannot re-purchase similar items at the amounts the insurance compensated them for.
Uh-ho... now the insurance folks have to make a terrible decision. Do they "take the owner at their word" and compensate {with replacement value} for items the owner is claiming to have owned or do they stick to their policy descriptions and stop.
Insurance companies are not among the largest conglomerates in much of the world because they roll-over or give-in!
Nope... they agreed to a policy amount with the owner and that's what they'll honor. It's not the insurance companies fault that all this great stuff escalated in such a way that it surpassed the values of the policy amounts. It's not the insurance companies fault the owner did not "inform them" {aka: schedule items specifically} that were now part of this once modestly valued collection of great stuff but has grown exponentially. Nope... it's not the insurance companies responsibility to keep up with the values of their clients collections.
That your responsibility!
Re-evaluating your collection of great stuff is actually fairly easy too.
As an appraiser trained with the ISA {International Society of Appraisers - Chicago} what I generally tell my clients is... on the next really rainy day where you simply don't want to go outside, take a few hours to cruise around your home with a video cam/still cam and shoot a photos of your stuff.
That's a start!!!
But... it's not the end-all-be-all for an appraisal or an assessment of current value. The insurance company "may" {and I stress may!} take that as an adjunct to identifying your collection at a given point in time but photos alone will most likely not help establish "value" for the items in the pictures. That is up to you.
During your jaunt around your home collection mentally tally up what you feel are the current market values for the top 100 things you enjoy the most. In other words... if you could safely run back into the fire and grab a select few items {say 30 items} and save them from burning what items would they be?
Besides people, pets and personal non-replaceable items such as family portraits and the like you would probably {instinctively} gather the most valuable items in your collection. Don't feel bad we'd all do the exact same thing.
As I tell my clients, begin with a current market assessment of the top 10 things you absolutely know are of great market value and get them to an appraiser you trust. You may actually be surprised that everything is not as valuable as you might think. Some things are and some are not. If you reach a level of replacement value that is beyond the "levels" established with you current policy {dialog with your insurance agent to discover what levels your policy has} then re-negotiate with the insurance company coverage for the items that are of exceeding value.
One more thing... re-evaluate every few years or more depending on the items you are collecting.
Just one example of fluctuating market values.... Autographs and celebrity memorabilia escalate and depreciate rapidly. Some are relatively easy to obtain but escalate up {an autograph by Neil Armstrong - first person on the moon - was free to get for some} while some are expensive to get when the celeb is a hot commodity {a Michael Jordan signed game jersey - very expensive several years ago} and then they fade from public eye and the value of the autographed item depreciates. You may be insuring a value-less item for no reason!
Re-evaluate often especially as your intuition tells you that you have gathered the quality trappings of a life lived well.
Another neat example of simple market fluctuation with regards to personal property...
Yours truly preparing to appraise and older {circa 1930's to 1960's} Acoma Native crafted pottery vessel.
The vessel was part of a Texas collection. The vessel was purchased originally by elders in the family when they returned from WWII. The vessel was purchased at the Governors Palace plaza square in Santa Fe, New Mexico for approximately "$4.00 to $5.00 dollars I think" as best the original owner could recall. The current market value at the time of the appraisal {for the family who was to inherit the vessel} was approximately $1200.00 to $2100.00
Take care of your collection... it's up to you to know what it's worth and to follow-up with insurance coverage as needed.
No comments:
Post a Comment