Getting insurance for your household contents and motor vehicles is pretty standard procedure these days. However, how does one go about insuring a Coca Cola memorabilia collection worth about R750 000, or a brand new Rolls Royce that was bought for R12 million, then sent for bespoke personalisation in Italy, resulting in the car arriving in South Africa worth about R25 million?
Tarina Vlok, General Manager at Elite Risk Acceptances – a subsidiary of Old Mutual Insure that provides bespoke short-term insurance solutions to high-net-worth individuals – says that they have a panel of specialists that are able to conduct valuations of these weird and wonderful items.
“The benefit of getting experts to conduct this type of value assessment is that they have no emotional connection to the bespoke item or collection, and can, therefore, assess the items from a purely replacement-value perspective,” she explains, adding that, often, these collections cannot be replaced, in which case the replacement value has to be agreed upon.
Over time, the appreciation value of most of these items is usually closely related to the exchange rate, she says. “Professional valuators consider this volatility when assessing the value. However, any addition to a collection or modification to a bespoke item will clearly have an impact beyond exchange rate fluctuations, and it is therefore recommended that these valuations are done every two years to ensure that your collection is correctly valued.
“If there has been no addition, the original valuator will probably do a desktop re-valuation based on rarity, supply and demand, exchange rate and exclusivity. With new additions, they prefer to do a new valuation,” she explains.
These valuable items do, however, often carry specific storage and care requirements when being insured. “Many valuable collectables and memorabilia – particularly fragile items such as old books or even designer clothing – may require temperature-controlled storage areas with controlled air-flow and lighting.
“In the case of looking after custom-made cars, clients will usually have structured and regular engagements with the vehicle manufacturers and/or distributors to ensure that the engines remain in good running condition. It also follows that these vehicles are not driven that regularly and are collected purely for the joy of the collection.”
Vlok says that when it comes to valuable collectables and memorabilia, the most common pitfalls remain underinsurance or not insuring the items at all. “This is often because people have no intention to ever replace these items – perhaps because their real value may be more sentimental than financial – or they are completely unaware that such items aren’t automatically included in a normal home contents policy.
“Nevertheless, failing to insure these items properly will result in substantial financial loss should something happen to them. Furthermore, if the items are not specifically excluded from the contents sum insured, it may result in underinsurance, which could lead to the reduction of settlement amounts on claims.”
Most importantly, however, Vlok highlights the need for specialist cover when it comes to insuring these weird and wonderful collectables and memorabilia. “Given the high values at risk, their complexity, and the need for a bespoke service, insurance for these high-value items is far removed from the high-volume personal lines market. This is one of the many reasons why specialist underwriters and brokers are required to effectively service the unique needs of the high-end market,” she concludes.