Part 2 – Insurance & Alarm Systems

One of the most important parts of your collection management activities is selecting and maintaining an insurance policy. Remember to allocate a portion of your annual collecting budget to this essential item. Some objects are covered under a blanket or umbrella policy as part of your standard homeowners insurance plan. Usually a certain amount will be covered automatically, say $10,000 worth of fine art and jewelry. That sounds comforting, but wait. You would be astonished at how small a figure $10,000 really is when you start adding everything up. Take the time to ascertain the real value of your collection.

It’s easy to be lulled into thinking you are insured when you aren’t. Don’t rely blindly on your landlord’s policy if you are a renter. Homeowners need to be wary as well. A woman recently bought a house and failed to insure it. The mortgage holder specifically demanded, as a condition of the loan, that an insurance policy be in effect. The new homeowner was sent a letter by the mortgage holder stating that an insurance carrier would be assigned if the woman did not comply. She didn’t and assumed the mortgage holder had the home insured. The home and all her belongings burned. She relied on the mortgage holder’s agency to pay her back. Guess what? The mortgage holder never insured the property and now they want paid back for the damaged dwelling.

As boring and unnecessary as it may seem, read your policy and go over it with your agent. Some policies insure for the original price of the items lost. Great. So you have a fire and lose your twenty-year-old refrigerator, which originally cost $200. The insurance company gives you $200. But you can’t buy a new fridge for that small amount today, right? Too bad. It can be even worse if your artwork is insured the same way. You bought the painting for $200 and it’s now worth $5000? Too bad. Here’s your $200. Bye.
Please pay attention. You want an insurance policy that covers you for loss for the fair market value of the items covered or reimbursement for like items in new condition. This way, if you loose the item, you have not lost its value or replacement potential. Another recommendation relative to insurance is to buy a policy from a financially strong and reputable firm. Those who suffered in the California earthquake of 1994 know about this. Some companies simply reported that they were out of money and would not honor any more claims. What about the premium? Too bad. Their attitude was “sue us.”

Another aspect of collection management is protection. Sure you can live like a hermit and keep people from knowing you have a household full of animation art, but someone sometime will find out anyway. The best protection is an alarm system.

Getting an alarm system isn’t as easy as it sounds, not a good one. Before anything else, please forget about do-it-yourself systems. Some electronic stores and national chains sells everything you need to put in your own alarm system except the professional knowledge to install it. Why chance it?
There are many different types of systems and the options are worse than for a new car: motion detectors, broken glass detectors, concealed door switches, magic eyes, you name it. You may even have one company install the system and another monitor it.

The most reliable and efficient system is called a hard wire system. This is where installers descend upon your home at the appointed time and spend all day wiring it up like something in a “Mission: Impossible” episode. Forget about wireless systems. They false alarm more often than not. Forget anything battery operated, too. There is a large back-up battery in the hard wire system, but the system should run on standard AC. Just remember that if it’s cheap or mindlessly simple it’s not what you want. It’s too important.

That’s the system. Now for the monitoring. Some people like to think their alarm is hooked up to the police station. And, in some small towns, this may be true, especially if they are the mayor. But the reality is that there is a monitoring service with a central station which, when your alarm goes off, verifies the address and location of the alarm-most are programmable-and reports the opening within the home where the violation has taken place to the local law enforcement authority.

Small alarm companies say they have a monitor service but may actually use an out-of-town service. There are many monitoring services across the country, but they can be slow and, in the event of a natural disaster, lines may be down, making information transmitted from your alarm system to the central station completely impossible. So, try to buy your service from a local company within your area code. Got that? Don’t cross area code lines. This is because the phone companies have stations that serve one area code and, if your station is locked in by some failure, at least your system can alert a local area service.