What do your clients love to collect?
Chances are, American Collectors can cover it
By Elisabeth Boone, CPCU
Collectible cars come in all sizes and American Collectors Insurance covers from large to small. Here Jill Bookman, Director of Marketing and Agency Relations, holds a collectible miniature car from The Franklin Mint Co. Miniatures are a hot commodity for owners of the full scale versions.
An 1870 Simon Halbig found in one of the collections insured by American Collectors Insurance, Inc.
It's a sunny Saturday morning, and as you cruise for a spot in the jam-packed parking area, your heart's already started to pound. You leap out of the car, reach into the trunk for your red wagon, and join the throng of chattering, jeans-clad people surging eagerly toward the entrance to -- the flea market! Like everyone else in the crowd, you just know that today is the day you'll find that 1935 Louisville Slugger -- that Victorian wrought iron gate -- that Lionel locomotive in mint condition -- that 1968 Barbie in the original package -- or something you weren't even looking for but will absolutely have to own.
Even if you don't fit the description of a flea market fanatic, a swap meet savant, or a garage sale guru, you can be sure that plenty of your clients are rising at dawn on Saturdays, putting on their most comfortable shoes, and heading out in search of treasures. A recent Parade magazine article (May 11, 2003) profiled Ralph and Terry Kovel, the "duke and duchess of the antiques world." According to the Kovels, annual sales at flea markets, swap meets, and antiques malls now total more than $30 billion. What's more, the National Flea Market Association noted in the article that, in an otherwise troubled economy, flea market sales were up 11% in 2002.
No two ways about it, $30 billion is a chunk of change. That's the good news. The bad news is that if your clients are relying on homeowners coverage to protect their collectibles investment, they--and you--may be in for a big disappointment. Some homeowners policies pay a fixed amount for unscheduled antiques and collectibles; other policies are not specific about collectibles and leave it up to adjusters to settle after a loss. The typical policy covers only named perils and excludes flood, water damage from drain backup or overflow, and earthquake. A high deductible will reduce the amount the insured can expect to receive for lost or damaged collectibles.
The really good news
The really good news is that your clients' treasures can be appropriately and affordably protected, and you can enjoy increased profits and retention. American Collectors Insurance, Inc., of Cherry Hill, New Jersey, established in 1976 to insure antique and collectible vehicles, has since expanded to provide coverage for a host of collectible items. "A lot of classic car owners have their garage walls lined with memorabilia related to their particular vehicle, like manufacturers' advertising signs, service station signs, and other items," explains Jill Bookman, vice president of ACI and the daughter of the agency's founder. "Our customers started asking us if we could insure these items, so we worked with our underwriter to create a policy that would meet their needs." ACI is now in its tenth year of insuring collectibles, and this segment of its business is growing steadily.
American Collectors' experience insuring antique and collectible vehicles translates well into protecting collectibles, Bookman observes. "There are a lot of features in our antique car policy that we transferred to the collectibles policy: agreed value, inflation guard, automatic 30-day coverage--because a lot of the same things apply to collectibles as apply to cars," Bookman explains. "Like vehicles, these items tend to appreciate in value, so the inflation guard feature is built in to reflect that. The automatic 30-day coverage recognizes that collectors will go to an auction or other event and snap something up, and they want the peace of mind that comes from knowing their purchase is protected."
Working with American Bankers Insurance Company of Florida, ACI writes business throughout the continental United States (in Minnesota, Collectibles policies are underwritten by American Reliable Insurance Company).
Policy features
Here's how the ACI collectibles policy works:
* The policy provides specific coverage for a collection, including accidental breakage, theft, fire, windstorm, flood, water damage, and earthquake.
* Additions to the collection are automatically covered for 30 days for values up to $2,000.
* More than one collection can be insured under the same policy.
* Collectibles individually valued at more than $2,000 are covered as scheduled items under the policy at no additional charge. Scheduled items are covered on an agreed value basis.
* An inflation guard feature automatically increases the value of scheduled items by 2% per quarter, up to a maximum of 8% per year, at no additional cost.
* The deductible is $100 per occurrence.
* The annual premium is $75 for coverage up to $10,000. For collections valued at more than $10,000, additional coverage may be purchased for $7.50 per $1,000 of value. Rates are the same for any kind of collection.
The policy excludes loss caused by or resulting from normal wear and tear, gradual deterioration, inherent vice, insects or vermin; repairing, restoration, or retouching; being handled or worked on; theft from any unattended vehicle; and mysterious disappearance.
The ACI collectibles policy provides coverage for a wide array of items, including figurines, dolls, teddy bears, vintage toys, model cars, miniatures, collector plates, ornaments, animation art, Disneyana, model railroads, carousel animals, and more. Not currently eligible for coverage are paper collectibles such as stamps, cards, and documents; record albums and videocassettes; china and flatware; watches and jewelry; coins; firearms; furniture, or fine art. "Because we don't cover fine arts or statuary, we don't compete with the Chubb Fine Arts policy," Bookman says.
The antique gumball and vending collection from a California insured includes a rare 1917 Leebold (front center), a 1930 EE Junior Football machine (left), and the "Triple Scoopy."
The collector may estimate the replacement value of a collection by using collector price guides and/or receipts to document purchase price. An appraisal is usually not necessary unless the collection contains items that are rare, unusual, and/or of very high value. ACI reserves the right to request an appraisal of a collection.
Fads are bad
A collection may be priceless to its owner but have little worth on the open market. The people who stampeded McDonald's in the late 1990s to snatch up Beanie Babies did manage to drive the price of the furry plush pets to astonishing levels--but today those cuddly giraffes, whales, and penguins are about as valuable as the paper used to print their ID tags. In evaluating collections for insurance, American Collectors is careful to steer clear of anything that looks like a fad. "People collect some oddball things, and we'll consider them as long as that kind of collection has a stable history and market value," Bookman explains. "For example, we have a California policyholder who insures his antique gumball and vending machine collection. He was initially insured with us for $40,000, but the collection has grown over the years, in both size and value, and we now insure it for over $100,000." Surfing eBay, arguably the planet's biggest flea market, gives ACI a heads up about what people are collecting and the prices these items are commanding. "You can go to a search engine like Google and type in 'gumball machines' and get 500 links to relevant sites," Bookman says. "The depth and breadth of collectibles information available on the Internet is really amazing."
Beer cans (remember Billy Beer?), telephone cable insulators, thimbles, cookie jars, baseball gloves, hatpins, rotary dial phones, poker chips--the list of collectibles is almost endless, and the prices they fetch are often eyebrow raising. Thanks to eBay and a proliferation of collector price guides, consumers are becoming increasingly savvy about their treasures and are tracking their values as intently as they review their stock portfolios.
An easy sale
As noted earlier, you may not get an adrenaline rush as you approach an antiques mall--but many of your customers do. For the agent or broker with homeowners clients, the ACI Collectibles policy is an easy sale and an excellent way to boost retention and goodwill. "Like the Collector Vehicle policy, this policy serves as a real door opener to the customer," Bookman says. "You're talking to people about something that means a lot to them. Their friends may laugh at them for collecting antique phone cable insulators, but you're talking with them about coverage for a collection that has both monetary and sentimental value. You're really tugging at somebody's heartstrings.
As their agent, you explain the limitations of a homeowners policy and how those gaps can be filled by a policy that's tailored specifically to the needs of collectors. By hooking up the collector with a collectibles insurer, you're really cementing that relationship with your client. The customer is being served by people who understand what he or she is collecting, are valuing it appropriately, and are providing comprehensive, affordable coverage. Our application is the essence of simplicity: It's one side of one page and can be downloaded from our Web site. It's a no-brainer; it takes about five minutes to fill out."
Sales opportunities arise in all kinds of ways, Bookman comments. "You might be sitting in a customer's living room reviewing a homeowners policy and happen to notice a curio cabinet filled with Lladro porcelain figurines. You ask the customer about the collection, and she says, 'You know, I have no idea what it's worth.' When you're a collector, your friends and relatives often give you items for your collection as birthday and Christmas gifts. The collection grows over the years and the customer may not be aware of its value. When you, as the agent, suggest that it's worth the customer's time to go through the exercise of determining the collection's replacement value, the customer may come back to you later and say, 'Would you believe this is a $30,000 collection? I really want to talk to you about that collectibles policy.' That happens a lot. Sometimes you'll talk to an avid collector who knows to the penny what the collection is worth--but many people are under the erroneous assumption that a homeowners policy will cover their collection in the event of a loss. It's the agent's responsibility to discuss this exposure with the customer."
Bookman offers a cautionary tale. "Several years ago, a prospective customer collected figurines and displayed them on glass shelves in her living room. She had received our application, filled it out, and left in on her desk to be mailed. Before she could get to the post office, an oversized truck rumbled by her house and shook one of the shelves loose. There was a domino reaction: The first shelf hit the one below it, and so on, and within seconds all her figurines were smashed to pieces on the floor. She was beside herself--and she had no coverage."
On a happier note, an insured stored many of her "mint-in-box" collector dolls in her basement. During a heavy rainstorm her basement flooded, and although the dolls fortunately were not damaged, the original packaging was ruined. "The value of many collectible items is higher when they're in the original packaging," Bookman explains. "When the customer filed a claim, the insurer reimbursed her for the decline in value of her collection caused by water damage to the packaging."
What's hot?
In addition to vehicles (cars, trucks, motorcycles), what are the most popular collectible items American Collectors insures? "Classic toy trains, model cars and trucks, vintage toys of all kinds, antique and contemporary doll collections, figurines by Lladro, Hummel, and Swarovski, vintage plush animals--we have many customers with valuable collections of rare and antique Teddy bears," Bookman says. "Our customers are just as fanatical about their Teddy bears, porcelain figurines, and model trains as they are about their Barracudas and GTOs."
Some of the things people collect are bound to cause snickers, if not outright guffaws, especially when the items appear overly sentimental or kitschy. Don't be so quick to jeer, Bookman warns. "We recently had a Precious Moments claim for $30,000," she says. "The manufacturer of these figurines has clubs for collectors, and you have to pay to belong. The last time I checked, they had over 800,000 members. This is a great example of why agents should pay attention to their customers who are collectors. It's a huge market that's not being seriously addressed. How many agents even ask about this when they're writing a homeowners policy? Mine never did!"
Because many retail producers aren't aware of the expanding market for collectibles, Bookman says, American Collectors writes about 50% of its collectibles business direct. "Most of our vehicle business is brokered, and we'd like to expand our involvement with agents on the collectibles side," she says. "Sometimes agents contact us not on behalf of clients but because they themselves are collectors and recognize the value of our policy. Once they see our coverage, they begin to build their personal lines business by offering the policy to their customers."
Whether it's Barbies, baseballs, bears, or beyond, collectors need protection for their treasures. Using the same principles that have made American Collectors Insurance successful in the antique and collectible vehicle market, ACI is rapidly becoming a major player in the world of collectors.*
For more information:
American Collectors Insurance, Inc.
Phone: (800) 360-2277
Web site: www.AmericanCollectors.com