Now that we are well into the new year, I thought that it might be worthwhile to explore a topic that many may not have previously thought about. While this post is not specific to the Pelikan brand or even fountain pens, I hope that it will be of some interest to anybody who has invested the time and money to cultivate an assortment of pens and pen related paraphernalia. As many of us know all too well, what starts out as a pen or two can quickly balloon into a collection, the contents of which may grow to represent a substantial outlay. What if something were to happen to that collection? Loss, theft, and fire are all real threats in today’s world and, while only objects, our collections represent an emotional investment as much as one of time and money. As casual collectors, this is hardly on the forefront of our minds but it is something that you should think about at least once. Property crime includes the offenses of burglary, larceny-theft, motor vehicle theft, and arson. While statistics show that this has been on the decline over the past decade, the menace remains very real. According to the FBI, there were an estimated 7,694,086 property crime offenses in the U.S.A. in 2017 resulting in losses approximating $15.3 billion. That equates to a rate of 2,362.2 crimes per 100,000 people. Burglary accounted for 18.2 percent of all the property crimes cited above and is something that is always in the back of every homeowner’s mind. We all hope that it won’t happen to us but tragedy could be just around the corner which begs the question; “Are you properly covered in the event of a loss?” A few high-profile examples of pen theft over the past few years come to mind. Recall that Dan Smith, aka The Nibsmith, had $40,000 worth of fountain pens stolen from his vehicle in May 2017. Then there was the case of Novelli who was robbed of a large quantity of pens and lighters in August 2018. While these cases represent the unique situation of vendors with large inventories, they still serve as good examples to illustrate the threat that is out there. Of course theft is only one peril that might befall a collection. Read on to learn what you may be covered for and what you should do to protect yourself.
The purpose of homeowners insurance is to provide coverage to repair or replace the home and it’s belongings should they befall certain perils (e.g. fire or theft). Renters and condo insurance policies are structured similarly. These policies can also help to cover your cost if there is accidental damage to another persons property or if someone visiting your home should become injured. For the purposes of this article, we will focus solely on personal property protection. There are two types of personal property coverages. The first reimburses the replacement cost for an item and typically pays what it would cost to buy a new item at the time of a claim. The second pays for an item’s actual cash value which is based on the estimated value of the item at the time of a claim. While this sounds great, it is important to keep in mind that the coverage of every policy is subject to a limit, the maximum amount that the policy will pay towards a covered loss. Many policies have a deductible which helps to reduce the annual premium but would need to be paid before the insurance policy’s benefits kick in. It may surprise you to find out that certain items may not be covered at all or that the coverage limits on your policy may not be nearly sufficient enough to replace your valued possessions.
While homeowners insurance is designed to protect you from losses due to a variety of circumstances, your collection may not be covered in the way that you think. In fact, if not listed separately, it is very possible that your insurance company could refuse to reimburse you for the loss of your items. Even if you do have some coverage, it is often the case that claims won’t result in a return of the item’s full appraised value. Reimbursements are usually limited to an actual cash value which does not take into account the collectibility or appraised value of the item. Sometimes, you may only get reimbursed for what you can prove that you actually paid for the items and only then if you have receipts. So, you see, it is an unfortunate truth that paying your premium may not be enough to provide adequate protection for your fountain pen collection. The coverage you currently have likely has sub-limits for certain types of property or even limits for each item. This is where a general policy tends to fail the collector. Let’s look at a hypothetical example to illustrate the point. Say that your homeowners policy provides $200,000 of coverage for the sake of this argument. That doesn’t mean that your high valued items are covered by the same amount. In fact, most personal property coverages are only 50% to 70% of the total insurance coverage. Something like a pen can be easily lost or stolen, so coverage is usually limited to a certain amount. Now let’s say you owned a limited edition pen worth a few thousand dollars. Your policy might only provide coverage for up to half of the pen’s value resulting in a net loss.
There are actually two ways to increase the coverage on your collection. The first is to raise the limit of liability on your existing policy. This is usually the cheaper option and for good reason. There are still limited amounts for both individual pieces and overall losses. An individual piece could be limited to just $2000 of coverage with an overall limit of $5000. Perhaps this would serve smaller collections made of relatively inexpensive pens but it could easily be surpassed should you have just a few high dollar items. If that is your situation, it may be to your benefit to “schedule” certain items on your policy or to purchase separate coverage, frequently referred to as an endorsement or floater, to further protect specific high-value items. While more costly, this option provides the broadest protection for your valuables. This is usually more involved and will often times require good documentation of each item to be scheduled as well as a professional appraisal in some instances. For larger, more expensive collections, this is frequently the best way to go. Even if you have purchased a floater or scheduled your more expensive items, making a claim for the loss of an item may still prove challenging. Insurers typically reduce claim payments on property by depreciation which usually does not pertain to items such as fountain pens. The result is that you may find yourself arguing with your carrier about the actual value of your collection, something that can be very hard to prove.
If your fountain pen collection includes items that aren’t replaceable, either because they are rare or vintage, then insurance companies are only likely to pay the actual cash value unless you have scheduled the item(s). If an item is scheduled then it is covered no matter what happens to it and this includes both on and off of the premises. What is most important here for a fountain pen collection is getting the replacement value without actually having to replace the item. The pen may have been a rarity and a comparable replacement may not be readily available. There are some other things to consider as well. Pens are small, portable items. By their very nature, they are prone to loss which increases the exposure of an insurance company. There may even be an exclusion for such items in your current insurance policy meaning you have no coverage at all so it is worth double checking. If you require sizable coverage, an annual policy via a floater may be priced exorbitantly high which is cost prohibitive. Insurance companies usually charge an amount per hundred dollars of value and the rate depends on the item. A good guiding principle is to schedule only those times that are irreplaceable. If you can go into a store and buy that item new today, it likely doesn’t need to be scheduled. As you add to your collection, you should update your policy accordingly. Should your collection be too large to be eligible for reasonable coverage under your existing policy, you may wish to look outside of your current company. Many general policy issuers aren’t well suited to the specialized coverage a collector may need. You should shop around, particularly with companies with an expertise in collectors and their valuables. Chubb is one such company that comes to mind but there are others out there. It is also a good policy to keep a detailed record of your collection as this will be necessary at the time of purchasing coverage as well as for when you file a claim.
Obviously insurance is just one piece of the equation. To provide peace of mind, there are other steps that you can and should do to protect yourself. Quality deadbolts on your doors and even a home security system are a good start. Make sure that your pens are protected in some way such as being housed in a case. A fire safe can provide an extra layer of protection depending on the size of your collection. Also, it’s probably a good idea to not broadcast the fact that you have valuables in your home. If you have any questions or feel that you would benefit from additional coverage, I encourage you to contact your insurance carrier or to reach out to a certified insurance broker.