How to Insure an Heirloom

An insurance company will take your word on most things in your home. There's no need to have your double oven appraised -- you just enter the value on the insurance form and if it's destroyed in a fire, you'll have the cash to replace it.

A $70,000 Oriental rug is a completely different story. So is a million-dollar diamond necklace or a letter written by your great, great, great second cousin Abraham Lincoln.

Individual objects worth more than a certain dollar amount (which varies by policy) will have to be specifically reported to the insurance company. And you'll have to prove that value by handing in either a receipt or a professional appraisal. Since you'll rarely have a receipt for a family heirloom, you'll be heading to an appraiser.

It's important that the appraiser be certified. He or she should also have a good reputation -- insurance scams do happen -- along with sufficient experience in the particular category your heirloom falls into. Ideally, you'll take a first edition Moby Dick to a rare book appraiser, an original Picasso to an art appraiser, and a vintage emerald ring to a jewelry appraiser. A great way to find a reliable appraiser is through a dealer -- a book dealer, an art dealer, an estate-jewelry dealer. They'll have connections in the industry.

An appraisal will take into account several factors, including the condition of the item, the rarity and the demand (what it would go for at auction, typically). Any documentation you have on the heirloom, such as a certificate of authenticity, should be supplied to the appraiser.

Once you have your heirloom's professionally determined value, you can get it covered for that amount. There are a few ways to accomplish that.

Insurance is one of those quagmires of legal language that can require an expert to navigate. Still, it's a good idea to know the basics before you talk to a broker so you know what to expect.

The first thing you need to find out is whether your heirloom is already covered under your homeowner's policy. To find out, look at your paperwork: What's the highest value covered for any one object? Are there any exclusions?

Or, better yet, ask the company that holds your policy. The people there can translate for you.

If your rug, painting or ring isn't covered, you'll need to purchase insurance for that specific item. You can do this in a number of ways, including purchasing additional insurance that's added on to your current policy, or buying a separate policy to cover a specific item or collection of items.

The more common approach is to purchase additional insurance coverage. This would be in the form of a "rider," a "scheduled item," an "umbrella," or a number of other ways (with accompanying jargon) to tack additional coverage onto an existing homeowner's or renter's policy.

Regardless of which approach you take, what you're basically doing is paying an additional premium (most places quote about $12 for each $1,000 of coverage) to add a high-value item to your covered assets. In the case that your heirloom were destroyed or stolen, your insurance carrier would pay out the replacement value of the item -- the amount it would cost you to buy a new rug or first edition or emerald ring.

Here's where heirloom coverage gets a bit hairy. First, you can't actually replace a rug that has been in your family for a few generations. You can buy a new one that has no family attachment at all. And then there are the family heirlooms that have no monetary replacement value -- your grandmother's apron is probably worth nothing to anyone but you, and to you it may be priceless.

Insurance can't cover sentimental value. If that heirloom ring disappears, the "heirloom" part is gone forever. That's just life. If the sentimental value is most important to you, and you almost never wear the ring or read the book, you may want to consider one of two things: a fireproof safe or, better yet, a safe deposit box. Those things are hard to get into.

For more information on heirlooms, insurance and related topics, look over the links on the next page.