Proper Protection

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I am writing concerning "Protect your Collectibles," by Robert A. Mamis (Personal Finance, January).

Regarding the statement "Most homeowners' policies require that in the event of the loss of a home, in order for the policymaker to collect, the replacement must be built on the same site": The wording in our homeowners' policies is not restricting as to where rebuilding is done. Some of the farmowners' policies have this type of restriction tied to a lesser amount of payment, but even then they pay that lesser amount if the building is not replaced or is replaced at another location.

The article states that "Standard coverage won't pay for mysterious disappearance of jewelry." Our homeowners' policies do not have this restriction.

Concerning values placed on such articles as jewelry, fine arts, or the like, the inference in the article is that once a value has been placed on paper, that is the agreed upon amount of the article in the event of a loss. This is not necessarily the case. Most personal-articles policies are written on an actual cash value basis (that is, cost to replace at time of loss less any depreciation) rather than on the stated-amount coverage. The value listed in the policy is not necessarily what you would be paid. The author mentioned an Ansel Adams photograph as an example.

The reason a value is set is to determine the premium and to set an upper limit. Of course if this were a stated-amount policy then the amount stated would be agreed to as the value by the insurer and the insured no matter what the market.

EDITOR-NOTE:

Mr. Mamis replies: Myers & Smith may be writing some enlightened policies for the people of Tiffin, but unfortunately such is far from the case elsewhere. As for point 1, while full replacement cost coverage is increasingly available on the terms Mr. Worland describes, I believe it remains that "most" policies still carry the noted stipulations. In answer to 2, indeed many policies do contain the in mysterious disappearance exclusion. In point 3, consideration of values placed on articles was meant to refer to a so-called stated-amount policy, as Mr. Worland notes. With the personal-articles policy he mentions, how can the cost of replacement of an essentially irreplaceable piece of art ever be agreed upon? The conclusion we both reach -- that traditional policies are apt to be inadequate for art collectors -- is a sound one.