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Personal Lines Insurance
Monday, August 1, 2005
Expert opinion

Many people may wonder how to indemnify a collectable item and how insurers determine the correct replacement value of priceless works of art, stamp collections, paintings or antiques.

In taking out insurance a client expects to be indemnified sufficiently to the extent he is returned to the same position he was prior to a loss. On the one hand the principle of so-called ‘betterment’ would define that he should not profit from a loss, while on the other, he should not be compromised either. This is particularly important when it comes to providing adequate cover for items that are difficult to value.
How, for example, would a 1934 valuable piece of jewellery inherited from a relative, and which is no longer available in the commercial market, be assessed for insurance purposes? And how would a claim be determined in the event of damage or loss?
Gari Dombo, managing director of Alexander Forbes Personal Services, says, “While insurers do not want policyholders enriched by taking out insurance, they also do not want their clients prejudiced should they present a claim.”
Arriving at the pure indemnity amount is not easy. Here are a few suggestions:
• Ensure valuations are annually certified by experts. Second opinions might also be necessary;
• Try and get an agreement with the insurer to the true value of each collectable item where there may be doubt; and,
• Store valuables in a safe, or have them deposited with a bank.

Clients are advised to consult with their insurance brokers and quantify their valuable items and collectables. Have them valued and specified in the policy.

Copyright © Insurance Times and Investments® Vol:18.4 1st August, 2005
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