Collectibles Insurance Agency Affidavit

[Archive]

Posted By: Kevin Cummings

I know some of you also have your collections insured through the Collectibles Insurance Agency. Along with my premium renewal notice this year I got an affidavit that I need to sign. The wording is as follows:

"The undersigned applicant has been advised by the undersigned originating insurance producer and understands that an insurance policy written by a surplus lines insurer is not subject to the filing or approval requirements of the New Jersey Department of Banking and Insurance. Such a policy may contain conditions, limitation, exclusions, and less favorable terms than a policy issued by an insurer granted a Certificate of Authority by the New Jersey Department of Banking and Insurance."

First of all, I have not been "advised" by the Collectibles Insurance Agency, unless asking me to simply read and sign the statement above constitutes that. Notified, yes; advised, no. And simply by reading and signing I understand? Maybe if they really advised me I would.

Can any of you laywers or insurance experts out there tell me, in English, what their statement means? Should I be looking for a new insurer? I'm not liking the looks of the "less favorable terms" piece.

Do any of you need to sign such an affidavit for Collectibles Insurance Agency or any other insurer or is it just us lucky Collectibles Insurance Agency New Jersey customers?

[Archive]

Posted By: Mike Peich

Kevin,

This is a great topic, and one my wife and I discussed yesterday as we returned from a postcard show. She asked if my cards were insured, and I replied that they weren't, but that insurance existed for collectibles. So, I'm interested in hearing responses as well, and in knowing who insures these over-priced pieces of cardboard we all own. I suspect many of us will be interested in the advice from the legal experts in our community.

Cheers,
Mike

As an aside, my wife spent more yesterday on postcards than I, thus insuring me a valuable chit I can use at any point in the near future!

[Archive]

Posted By: leon

Scott and I use CIA for our auction company but I don't have the policy with me. Obviously I am no lawyer but from just reading the disclaimer I am not sure it's a big deal. It just says that this policy doesn't conform to a certain standard. I think if you read the policy and are happy with it then it will not be a big deal. That disclaimer would make me really analyze it more than I normally would though. Maybe a lawyer or expert on such matters will chime in. I don't see great cause for alarm in that statement alone, speaking from a lay persons point of view. regards

[Archive]

Posted By: hennessey

I also just recieved my renewal notice. the darn thing was aprox. 20 pages. of course i didnt read it, but i did look for the paragraph you posted and i didnt have one in my packet. mine just advise they where changing the under-writer to LLoyd's of London to keep our rates affordable. they also wanted to up-date their customer's records on myself. nothing else. I live in Indiana..... good luck on yours

[Archive]

Posted By: Dave Haas

Kevin,
Maybe it's just a New Jersey thing. Do you happen to live in N.J.? I received my renewal this week and it didn't include that statement but I live in Florida.

DH

[Archive]

Posted By: James Gallo

I have had a dealer policy with them and they really are great. I have had several claims and the last of 5K and there was not and issue paying out. they changed to Loyds last year I believe.

I did not get this disclaimer and it sounds specific to NJ. I would just call them and I am sure they can help.

I wouldn't use any other company for collectibles. As an FYI only items valued at over $5000 needed to be listed, everything else does not.

James G

Looking for 1915 Cracker Jacks and 1909-11 American Caramel E90-1.

[Archive]

Posted By: Todd Schultz

I don't believe it to be a big deal. As you know, states regulate insurers, who in turn use various underwriting processes to assess risks and charge premiums. The underwriting practices are largely uniform and familiar to those in the insurance industry, at least when you're dealing with standard life, casualty, health and auto insurance. Thus regulators can review insurance policies to see if coverage seems rational, fair, and the type contemplated by consumers, and if exclusions or limitations reflect what is commonly seen in the industry.

Surplus lines like the policy you have with CIA offer coverage for nonstandard or unique risks. They simply don't fit into the normal underwriting process of risk assessment. As such, there are ususally niche insurance carriers to address these and offer coverage. These surplus lines insurers are generally not licensed or approved through the "normal" regulatory process, as States do not want to spend extensive resources analyzing the underwriting process on an ad hoc basis for such variable risks. Still, States will allow insurers to issue surplus lines policies, often on condition that the policy state some sort of disclaimer that the insurer has not been approved or licensed by the State, and that the insured understands that. I believe that's all we have here. Basically, it's a big "caveat emptor" to those contemplating such insurance that the State has not reviewed it and will probably not be there for relief if you have problems.

Hope this makes sense.

[Archive]

Posted By: Al

Doesn't your homeowner's insurance cover your collectibles? I am insured with USAA and have had this discussion with them a few times and was told to simply maintain good data on my cards, i.e. scans, cert #s and original purchase prices to verify any claim I may make (hopefully never).

[Archive]

Posted By: Jeff O

Al - some homeowners provide coverage for cards and memorabilia; some for memorabilia, but not cards; and some cover neither. Also, many homeowners policies have maximum limits that will be paid for losses involving some types of property - this is particulary common with firearms, cash, stamps, precious metals, etc., but some carriers also have limits on collectibles. Taken a step further, most homeowners policies are "named peril" policies for purposes of personal property - so if the cause of your loss is not included on that list of named perils, you don't have coverage. Named perils normally include things like fire and theft; but if your dog eats your Babe Ruth card and your policy doesn't include damage caused by domestic animals in its named perils, you're out of luck. It's important to understand what is covered and what is not.

With regards to the NJ question - an earlier response pointed out that the individual states control their own insurance laws. CIA is letting you know that since their policy is not "approved" by the state of NJ, certain remedies/practices that exist in NJ may not apply to this policy. What specifically those might be would require research - and an insurer is unlikely to provide you with a list because if they leave out something, they'd likely be on the hook for it.

Jeff

[Archive]

Posted By: boxingcardman

we have a government entity called CIGA that guarantees insurance against issuer failure, paid for by a levy on each policy written by an admitted insurer. A surplus lines insurer does not participate in CIGA; if it goes belly up, you lose the coverage. However, a strong insurer is a relatively good bet not to go belly up, so a surplus lines insurer is not always a bad thing. It allows for coverage that might not otherwise be available and not at a reasonable price.

Sic Gorgiamus Allos Subjectatos Nunc

[Archive]

Posted By: Kenny Cole

As previously stated, most states have funds that protect insureds, up to a certain limit, if they have a claim and the insurer becomes insolvent. At least here, surplus lines insurers aren't part of the state Guaranty Fund so insureds with a surplus lines policy have no recourse against the fund if the carrier goes under.

The other difference, at least here, is that insurance agents are statutorily considered the agents of the carrier with respect to all matters pertaining to issuance of the policy, with the exception of agents who are selling surplus lines coverage. They are statutorily considered to be the insured's agent. It can make a pretty big difference in certain types of lawsuits, but probably isn't that big a deal otherwise.

Kenny Cole

[Archive]

Posted By: Al

Thanks for the pointer on "named peril". I will follow up with USAA and get crystal clear on my coverage. I don't have a dog, kid is long gone, but I will check out my coverage.

[Archive]

Posted By: Frank Flood

I usually shake my head at how knowledgeable people are on this forum. With this question, I finally have something to share.

Todd Schultz's comments up above are right on the money; if he's not an insurance lawyer, he should be.

Insurance companies licensed to write insurance in the state in which we live provide most of the insurance we buy. Allstate or State Farm, which provide auto and homeowners insurance, and CNA or Travelers, which provide business insurance, are called "admitted" insurers. They have met certain financial and organizational standards and your state has admitted them to write insurance. The trade-off for being admitted is to agree to state regulation. Generally, each state regulates the policy forms and premiums charged for personal lines (auto and homeowners) to a greater degree than they do commercial or specialty lines.

There are some risks that admitted insurers don't cover for reasons such as high risk (dynamite factories) or the requirement of some uncommon knowledge base (collectibles). While the state has an interest in regulating the insurers, they have an equal or perhaps greater interest in seeing that their consumers can buy the insurance they need. So the deal the state department cuts with the insurance industry is they will allow "non-admitted" insurers to provide this needed insurance and they will not regulate the terms of, or premiums charged for, the coverage. This insurance is said to be placed on the "surplus lines" insurance market (sometimes called the excess lines market or E&S).

Every state but Alabama, DC, Indiana and Massachusetts (barring some recent change in law) requires a surplus lines policy to have some specific statement that the insurer is not admitted, is not regulated or is not covered by the state insurance guaranty fund. The notice on the New Jersey policy complies with that state's requirements.

The effect? The terms of your policy have not been regulated or reviewed, so this is more of a free market approach: a willing policyholder and a willing insurer have cut their deal for coverage.

Your risk? If an admitted carrier goes into receivership or liquidation (more likely in these troubled times than previously), your state has a guaranty fund that will pay at least some of your claims somewhat like the way the FDIC insures bank deposits. E&S carriers are outside of guaranty fund coverage, however, so if your insurer goes under your claim may be unpaid.

Frank Flood

[Archive]

Posted By: Larry

Everyone "in the know" realizes that collectibles insurance is just a scam and a waste of money. Like life insurance, if your entire collection gets wiped out and the sum is huge, they'll have investigators find a technicality to deny coverage, regardless of how many years you've been paying premiums.

[Archive]

Posted By: Matt

Larry - have you registered yet for the new forum?

My Trade/Sale Page

[Archive]

Posted By: Al

Spoke with USAA this AM...

My cards are covered under my Personal Property portion of my Homeowner's Insurance policy. They do not offer a separate policy for paper products. It is highly advisable to make scans of all cards which clearly show the cert # and the cost basis of the card(s). I will be making a disc with scans of my stuff and include all paypal and checkbook data about what I paid, to be included. I plan to house these documents at my bank in my safety deposit box in the event I have an unpleasant experience with my cards. There is however a $1k deductible on my policy for this loss should it occur.

If you have used esnipe (as I always do), you can get a complete history of your activity to show to the adjuster exactly what you paid for every card won via esnipe. This is a "more is better" to validate what you lost and what you paid. Undoubtedly, adjusters must roll their eyes as soon as you say "my baseball card collection was destroyed", that's just my opinion.

[Archive]

Posted By: James Gallo

Larry- I disagree and I know from experience. My last claims was about $7500 and after the small $250 deductable and the salvage value they paid out without anyone even coming out or looking at anything beyond the list I sent and a few pictures. This company has been around since the 1960s and started out with stamps and coins.

I have now gotten more money out of them then I have paid in premiums. Perhaps it would be differnt with a non dealer policy, but the premiums would also be a lot lower.

I generally am not a believer in insurance but this is a must in todays world.


Al- All that being said if you try to put in a claim with USAA va CIA you will have two very different experiences.

As they and I have stated they will basically accept your word on any single item that you value under $5000, over that they want the item listed. They don't make you have scans or cert numbers and they won't even argue with the values (at least in the several claims I have made).

I think USAA will send someone out and say you lost a 1952 Topps Mickey Mantle well they are all over ebey for $20 why is yours with 10K, they won't understand the difference between the card that was issued in 1952 and in 2009.

A friend of mine had this problem, trust me for the money CIA is much better then any rider on any home owmers policy.

As a side note there was a good article on collectible insurance in the Henderson (I Think) issue of SMR.

James G

Looking for 1915 Cracker Jacks and 1909-11 American Caramel E90-1.