Have you ever been required to tell a good friend or relative that you have bad news for them? Sure you have - and it's not any fun. It is especially unpleasant when that friend or relative is also a business client. In the case of insurance such discussions can lead not only to the loss of a client, but also a friend.

Nowhere can the terrain become more fragile than when someone has experienced an insurance loss that was not covered by the policy. The problem is compounded even more if the loss happens to be to something that is very personal or very valuable to that client. Such is the case when it comes to insuring collectible items such as cookie jars.

Many people mistakenly believe that collectible items do not need any special insurance protection. Unfortunately they usually only find out differently after a loss has occurred. The best way to evaluate whether or not you have some items that deserve special insurance is to use a little common sense. Homeowners insurance policies are written to provide insurance protection for the average person.

If you just ask yourself this simple question, you will be able to determine whether or not you need to take any precautions to protect your property. "Do I own or collect anything that is unusual, of extraordinary value, or special interest?" If the answer to this question is "yes", more than likely you need to discuss this matter with your insurance agent. By doing so you will be able to save yourself and your agent a great deal of grief - and more than likely preserve your friendship.

You can protect your collectible items by a separate policy or by endorsement to your homeowners policy. There are several reasons to do so. The most important reason is to determine the value of the property before a loss occurs. Normally you will be asked to provide an appraisal of the property by an independent appraiser. You may also need to provide a photograph. Even if you have your items added to your policy, you need to still be aware that there are limitations on how much the policy will pay.

According to the language of the endorsement, the policy will not pay any more than the LEAST of the following amounts:

1. the actual cash value of the property at the time of the loss or damage
2. the amount for which the property could reasonably be expected to be repaired to its condition immediately prior to the loss
3. the amount for which the article could reasonably be expected to be replaced with one substantially identical to the article that was lost or damaged
4. or the amount of insurance.

By scheduling the articles you will also be protected against more types of loss or damage to your property. Your property will be protected against any direct damage to it unless it is caused by a few types of losses that are described in the endorsement. It will normally even cover certain types of loss and damage caused by breakage.

This is a general description and is not intended to apply to all policies. Not all policies are the same. You will need to discuss your specific needs and concerns with your agent.

About Dan Ramsey:
Ramsey has been involved in the insurance industry for over 30 years. Ramsey owned an independent insurance agency, was an elected member of the state legislature and now works for a trade association in the insurance industry.