Along with the blessings of owning valuable possessions like jewelry, fine art, electronic equipment and other wonderful things comes the risk of losing them. The more cool stuff you own, the more homeowner’s or renter’s insurance you need to protect it in the event of loss through a catastrophe like a fire, theft or mysterious disappearance (more on this in a bit). Ordinary basic homeowner’s policies may not cover the replacement value of expensive items. Some policies may even exclude certain possessions. And some policies may not cover losses incurred under certain circumstances.
Homeowner insurance and renter insurance policies are generally written on either a named-peril or all-peril basis. As the name implies, a named-peril policy only covers specific possessions lost or damaged under specifically named conditions. All-peril policies, in contrast, provide broader coverage, but even this is no guarantee that everything you own is always protected. Every type of insurance policy has exclusions and limitations.
Endorsements (also called riders or floaters) are supplemental coverage you can add to your homeowner insurance or renters insurance to deal with exclusions and limitations. You can purchase them to cover a specific item or a group of items (e.g. stamp collections). You may need to provide a professional appraisal in some instances to prove worth. The cost of any insurance including endorsements will depend on many factors such as the value of what you’re insuring, your deductible and your claim history.
Now, let’s say you own a beautiful ring or an expensive watch. You walk out the door and when you come home, your valuable possession is missing. There’s no visible sign of forced entry. You may have forgotten to lock your door. You may even suspect a sticky fingered relative. You have what insurance companies call a mysterious disappearance on your hands. Mysterious disappearance is typically a covered peril on a par with theft, but not always. Your policy may have a mysterious disappearance exclusion clause. According to the Barron’s Insurance Dictionary, such a clause “excludes coverage for loss of property if the cause of the loss cannot be identified.” If your policy does not have this clause, it implicitly insures against mysterious disappearance of a valuable and would cover the loss up to the stated limits even if you don’t remember how it happened. Note, however, that most unendorsed homeowners policy covers jewelry up to the content limit for perils covered, except theft or mysterious disappearance. In those instances, there is probably a cap on claim. If your jewelry is worth more than the cap, you’re underinsured and should consider an endorsement or rider.
Every homeowners insurance policy and renters insurance policy is unique. What is covered, how losses are reimbursed, and exclusions and limitations will depend on your particular policy, carrier and other circumstances. That’s why we always advise you to read the fine print rather than assume you’re covered.