Be aware of the insurance pitfalls of collectors’ items

The recently released Barbie movie has caused a global sensation. Since its release this weekend, it has smashed box-office records. Regardless of how you feel about the doll, it cannot be denied that it has become a cultural icon, having evolved from simply being a child’s toy to today being a sought-after collector’s item.

“High-value Barbie collections have captivated both collectors and ordinary people alike for some time, and the recent movie craze will no doubt see a resurgence in the doll,” says Tarina Vlok, MD of Elite Risk Acceptances, a high-net-worth insurer and subsidiary of Old Mutual Insure.

Just this week Toys R Us announced a 30% surge in sales of the iconic Mattel doll, with the shop even catering to collectors’ potential demands by selling special editions. Designer collaborations may also, according to Vlok, be on the rise.

“We have in recent times seen collaborations between brands and designers in a bid to cater to collectors, and auctions involving Barbie are fetching astronomical amounts. These are not simply ordinary items anymore,” says Vlok.

Recently a Barbie doll went on auction for an astounding $302,500, just over R5 million. In addition, some time ago Mattel collaborated with Balmain to create a Barbie collection, all in pink. Although there are no dolls available yet in South Africa, watch this space and consider the cost of a high-end luxury branded doll – anywhere from R6000 to R22 000. Even vintage Barbie dolls from the early years can fetch high prices in the collectibles market.

“It is no surprise then that for some collectors, Barbie dolls even represent an investment opportunity. As the value of certain Barbie dolls increases over time, collectors may choose to buy them as a long-term investment.”

Collectors should know that limited production runs make these dolls more valuable and sought after. Barbie dolls that are well-preserved and in their original packaging can also significantly increase in value over time, especially when they become rare or discontinued.

“However, for collectors who are too quick to get swept up in the craze, there can be pitfalls,” warns Vlok.

She says that collectors’ items – even though they may appear to be simply ordinary items wrapped up in exclusivity – must be insured for their value to be protected against risks. “While the sentimental value or uniqueness of these types of sought-after collector’s item cannot be replaced in the event of a loss, insurance can put the collector back in the same financial position prior to when the loss occurred,” she further explains.

“These pieces are expensive because they are unique and should be protected against sudden and accidental losses. One issue that many individuals face when buying an item is insuring it at the bought-for value, rather than the replacement value, and price shifts may mean the difference in the two values could be significant, locking in financial losses if putting in a claim.”

She reminds collectors that some Barbie dolls would be classed as rare items, which means that the value of a rare asset is influenced by various factors; including exchange rates, global trends as well as whether or not the item’s investment class has grown.

“It is important that collectible items or whole collections are insured on an agreed value basis, where collectors and insurers mutually agree the replacement value before a loss occurs. This agreed value is then what will form the basis of the compensation in the event of a loss. The insurer will try to source the exact item for you, but in the case of an item being irreplaceable, your insurer would compensate you financially for the loss based on the agreed value.”

Below are her tips for collectors of unique items – Barbie dolls included.

  • Always pack and protect something in accordance with its value.
  • Consider the influence of inflation and other market forces, and have the appraisal reviewed regularly at least every three years.
  • If purchasing the item at an auction but delivery to you takes place on another occasion, find out who would be liable in the event of a loss during transit from the auction house. In other words, find out if “in transit” cover needs to be arranged under your own policy or that of the auction house.
  • Make sure you take adequate steps in keeping an item safe.
  • Speak to your broker and insurer about the best options for insuring your high-value item, because not all policies are created equal.