The Showroom Finder Shopping Guide

Why Insurance Companies Can Refuse to Pay Claims

Recently, I was asked to appraise an estate for a Collector of rare antiques and fine arts.  The estate was one of the finest I’ve seen since my visit to the Louvre in France.

I asked, “Are these items insured?”  My client responded with a very positive “yes, all contents are covered under my Homeowner’s Policy”.

I asked to see the policy…  and, “no” they were not insured because fine arts, rare antiques, coins, gold, silver, jewelry and furs require a rider to the policy.  In the event of a loss payable, the insurance company was not obligated to pay anything other than a token dollar amount… on jewelry which is about $2,500 and fine arts not to exceed $5,000 total!  Yes, total!!!

My client collected fine arts and paid as much as $50,000 for just one painting that dated back to the 1890’s by an Italian artist who, of course, is now deceased making the art work worth even more.  I find these issues to be true more often than not leaving the collector speechless when payment is denied.  This is exactly why I always ask to review the insurance policy.

I Look to see what the dollar amount is that you will be paid and if the loss payable is made based on cash or replacement values.  This is another area that is riddled with misconception, i.e., you won’t get paid the cash value unless it’s specified in the policy.

Further, the cash replacement value is based on the “current market” and may be substantially lower than what was actually paid.

Most antiques cannot be replaced unless they were production made and even at that it’s difficult to get an exact match.  How do you replace something with over 100 years of patina?  It can’t be done.  In cases like that, some insurance companies will offer you a comparable substitute… at a value based on the current market.  Aren’t antiques supposed to “appreciate” with age?  Certainly, but the insurance companies will try to depreciate them for normal wear.  These are things that your agent either doesn’t know or won’t tell you…

I’m sure you receive changes to your policy from time-to-time, surely with each renewal.  Please read these changes carefully.  Let’s say there’s a break-in and items are either damaged or stolen.  Are you aware that if your property has not been “maintained” in accordance with the policy provisions the insurance company can deny the claim? In the alternative, they can assess the duration of the latent defect and pay you accordingly or not at all!

The bottom line is… insurance companies really don’t want to pay claims and they will constantly amend your policy to exclude things we all take for granted.

Some policies have exclusions above and beyond the expected. For instance, if the leg of an expensive antique table is damaged, they will agree to fix or replace the leg.  This should not be acceptable because the piece has been devalued due to replacement or repair.  If you decide to sell the antique in the future, you are obligated to make the disclosure that the item has been damaged and repaired.  Assuredly, it substantially affects the price.  Don’t take “Caveat Emptor” for granted…  if you don’t make the disclosure, you can be held liable.

Antiques and collectibles are “appreciable assets”, and many collectors buy them for just that reason.  The older it is, the more it’s worth.  Let’s take Christy’s Auctions for instance.  If you check the auction results, you’ll find that they have consistently sold items 100 years and over for thousands more than what was paid. Therefore, don’t invest money in rare and expensive items unless you have them scheduled on your homeowner’s policy.


About the author

Florence Quinn, G.C.A., Cum Laude is a Graduate Certified Appraiser as well as a retired member of the legal profession having worked in the Wills & Trusts Department of a major law firm. Her experience in the antiques and personal property industry spans over 50 years. Ms. Quinn owns and operates BackStreet Antiques & Appraisal Company in the heart of the San Dimas Historic District.