Your Policy May Not Be Worth Its Weight in Gold

In the past few years, the price of gold has risen quite steadily, causing many people to invest their money in the precious metal. What this means is that some homeowners with large gold investments have actually stored their gold at home. Unfortunately, the standard home insurance policy offers little, if any, protection for the loss of gold from the home regardless of where you live: Charlotte, Baltimore, Portland, Raleigh, Oklahoma City. In fact, gold, silver, and precious stones all have very limited coverage under the home insurance policy. If you don’t wish to keep these in the safe deposit box at the bank, you should understand what little coverage is actually available to you.

Under the standard home insurance policy, usually $2,500 of coverage is available for the theft of silverware and goldware. Keep in mind that this is a distinction from regular gold and bullion, which is the usual form that gold takes when investors are storing it. For bullion, no automatic coverage is available at all under the standard policy. In a recent story by NBC2, a homeowner found out the hard way that the home insurance policy had very limited coverage. The family’s in-home safe was stolen, along with all the gold in it, and they were only reimbursed $1,200 by their insurance policy.

In addition to limited coverage for gold, the home insurance policy has special (lower) limits on the following personal items: money, coins, medals, bank notes, securities, checks, cashier’s checks, traveler’s checks, money orders, precious stones, and jewelry. These all tend to be high-value items that are also small and easily transportable, presenting a great risk to the insurance company. Additionally, the specific amount or value can be difficult to absolutely establish, which leaves a lot of room for potential fraud. As a result, the insurance company only wishes to offer a small, token amount of coverage. If you are interested in more coverage, you need to have a more specialized policy.

In certain instances, the insurance company may be willing to provide you with additional coverage for your high-value items. For example, it’s not uncommon for homeowners to purchase floaters for their jewelry and furs. A floater is a policy specifically meant to cover small, high-value items that are easily transported. Floaters can be of great benefit and often are tailored to your specific collection of valuables, with some coverage enhancements not available on the regular home insurance policy.

One thing to consider, though, is that a floater may not be available for your entire life’s savings — in gold. Some items may simply be too difficult or risky for the insurance company to take on. If they do agree to insure your valuables, they may place certain conditions on you, such as requiring a home security system and a certain type of safe. These risk management steps help you and the insurance company to minimize the risk of loss.

Before you decide to store anything of high value at home, be sure to have a conversation with your insurance company. Otherwise, you might be in for some expensive disappointment in the event of a loss.

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