So you’ve become a wine collector.
What began as keeping a few bottles on hand developed into a passion for collecting. That hobby cellar has grown into a sizable investment in age-worthy bottles, and as a risk-conscious person, you’ve begun to wonder whether you should worry about protecting the value of your collection or if your homeowner’s policy is sufficient to do so.
A standard HO3 or HO5 policy does provide blanket coverage for most personal property—furniture, clothing, electronics—just about anything you would take with you if you were to move. Such blanket coverage may be sufficient to cover your collection in the event of a total loss of your home. But what about potential damages affecting only your wine collection?
Most homeowner’s policies aren’t designed to protect wine or any valuable collections. They usually stipulate “sub-limits of coverage,” limiting the carrier’s liability for valuable items such as jewelry, watches, firearms, art, or other collectibles. Most homeowner’s policies also have a deductible. If, for example, a burst pipe in your home were to cause $4,000 worth of damage to your wines, you may find that a $5,000 deductible negates your entire damage claim.
To know whether and to what extent your homeowner’s policy can protect specific articles of your property, you’ll need to review your contract carefully, ideally with an expert. Unless such a review confirms that your policy is sufficient to cover your wine collection, it probably isn’t.
Consider a Valuable Articles Policy
A “valuable articles” (or “personal articles” or “collections”) policy is a dedicated policy, separate from your home, auto, or other policies. Such a policy is tailored to the nature and “unique perils” of the articles it covers and is typically not subject to a deductible.
As a rule of thumb, if your wine collection is worth $85,000 or more, it certainly makes sense to have a valuable articles policy—but you may wish to begin insuring well below that value. Whether it makes sense to insure or not comes down to your risk tolerance at the end of the day. If your tolerance is high, you may prefer to bear part or all of the risk and save the cost of an insurance premium. If you have little appetite for risk, though, it’s easier than ever today to protect the value of a wine collection against most kinds of harm.
Environmental (temperature, water, humidity) risks, breakage, and mysterious disappearance are just a few of the perils unique to wine that are typically not covered under a homeowner’s policy but is covered under a valuable articles policy. When you work with a sophisticated carrier that offers specialized coverage, the underwriters understand the dangers that are unique to wine collections and any claims are adjusted and reviewed by experts.
Three Methods of Defining Your Coverage
If you decide to insure your collection using a valuable articles policy, you’ll have the choice of three methods of defining your coverage: a blanket, a schedule, or a combination of the two.
Blanket coverage will protect a collection up to a specific aggregate limit. This is the most popular method of coverage for wine collections because they are so dynamic. Whether you buy, sell, drink, or gift wines, your collection probably undergoes frequent changes. Instead of having to modify your policy regularly, a blanket sets the coverage at an aggregate limit (often subject to a per-bottle limit) without the need to itemize each bottle.
Under less common circumstances, such as when a collection includes extremely rare and valuable bottles, it can make sense to “schedule”—or separately itemize and set the value of each bottle covered under a policy. Normally, such bottles would be the exception to the rule and the majority of the collection would be covered by a blanket.
Don’t Go It Alone
Insurance can be complicated and confusing. At the Horton Group, we encourage clients to explore and understand all of their options before making any decisions. We help them to navigate the many tailored options available to collectors today.
If you’d like to speak with a knowledgeable wine insurance specialist, contact Ken Sidlowski by email or at 708-845-3159.
Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.
