Not Your Parents’ Collectibles Market
Collections and collectibles come in all shapes and sizes. You might own a set of antique figurines passed from generation to generation. Perhaps a relative gave you a treasured stamp collection. Or maybe you managed to save all your childhood comics in pristine condition.
Sometimes collections and collectibles are worth more than simply a dollar amount. However, if those special items do have value, it's important to document their condition, record the contents and provide adequate protection in the form of collectibles insurance. Without detailed, expert review, you may overestimate or underestimate the value of your collectibles and, therefore, not know how to properly insure them.
Collecting Is Changing
While the general categories of popular collectibles largely remain unchanged – art, sports memorabilia, watches, cars and antique household items – how the current generation of collectors approach collecting is rapidly changing. Most notably, younger collectors are comfortable evaluating and making purchases on-line, something unthinkable just a few years ago. According to the 2020 edition of The Art Basel and UBS Global Art Market Report, high-net-worth (HNW) millennials are now the fastest-growing constituency of art collectors, and at the top end of the market, they buy more art and spend more on it than any other demographic.
While much of this art is in its traditional form, a growing amount is digital and purchases in all mediums are being driven, in-part, by social media commentary and recommendations. This social media component is helping to shift the type of art that is important to millennial investments. Art with a social impact is a popular category, promoting work by women and minorities and highlighting pieces that express ideas and values that resonate with the younger buyer.
Then, when it comes to some standard categories of collectibles, what is being collected has broadened. For instance, when it comes to sports memorabilia, autographed trading cards and game balls now take a back seat to sneakers and jerseys. Last September, a collector paid over $10 million for Michael Jordan’s “Last Dance” jersey and, in January of 2022, a pair of the extremely- sought-after Louis Vuitton x Nike Air Force 1 sold at a Sotheby’s auction for $352,800 (and coordinated by Sotheby’s new Sneakers Business Unit).
The financial site, MoneyMade, reports that, in 2023, collecting trends will see increased interest in toys (Star Wars as well as Frozen brands at the top), fractional shares of sports memorabilia, rock ‘n roll memorabilia and fine wines. In fact, it was noted that fine wines outperformed most other asset classes while being less volatile and having less downside risk. Services are popping up to allow collectors to purchase fine wine, store the wine and then trade their collection as they would stocks.
Value Your Collection
When it comes to protecting a collection with adequate insurance coverage, a value must be calculated.
1. Assemble documents and an inventory
It can feel overwhelming to try to establish a value for thousands of coins or antique toys, so start with what you know. If you have any documentation on purchases or provenance, gather those. The provenance is beneficial in detailing the significant history and journey your collectible has traveled whether it be the origin, previous owners or historical value along the way. Note all items of a collection in an inventory like you would for a whole home inventory.
A detailed inventory including expert valuations can help you not only document your collection, but also provide valuable information if you plan on insuring these items.
2. Hire an appraiser
A professional appraiser can be useful for a number of reasons. Their expert documentation helps establish a value, which in turn enables you to obtain the right level of collectibles insurance coverage. For insurance purposes, you'll want to know the "retail replacement value" — the highest amount that would be required to replace an item with a similar piece. If, in the future, you decide to sell a portion or all of your collection, the appraisal can help establish a market value, too.
Finding a qualified appraiser is not difficult. Many appraisers belong to one of three major organizations: The Appraisers Association of America, the American Society of Appraisers or the International Society of Appraisers. These groups have strict standards around expertise and ethics.
3. Review your insurance
After you have completed the inventory of your collection and have had it properly appraised, it's a good idea to insure it. Most homeowners insurance and renters insurance policies provide only limited protection for collectible items. There is a separate policy, specifically for items such as valuable jewelry, antiques, fine art, collectibles, etc., that may provide broader coverage than a homeowners or renters policy. Individual items are typically insured up to a specific amount, or large collections of certain types of items (like wine collections and sports card collections) may be insured on a blanket basis. The Personal Articles Policy may be used to insure just a few items or an entire collection.
It is important to understand the difference of agreed value versus stated value when insuring your collection.
4. Periodically reevaluate your collection
Set a timeline to check in with an appraiser about a rise or fall in value, which may require an adjustment in your collectibles’ insurance level, too.
The proper handling and storage of collectibles can help maintain your collection's integrity and value.
Cherish the Memories but Protect the Value
Collecting often begins with the passion for a subject but can end with a financial windfall. Failing to protect your collection would be just like not insuring your home, business and other important assets.
