How flight from Paris and Sex in the City make you think twice about insuring your home.

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This post is longer than usual but well worth the lesson shared.  The Paris and Sex part don’t come until halfway down but don’t skip…..you will understand if you read from the beginning. 

We recently helped a client in California who was updating their home owners insurance.  His art and jewelry collections were well documented, appraised and properly scheduled on his policy however he lived in an upscale apartment building and did not know how much all of his other stuff (a.k.a. contents, personal property) was worth.  At 75 years of  age, he and his wife had amassed a variety of things in their home and even spent above average for everyday furnishings such as a breakfast table, office chairs, rugs, fine china, lighting and even personal accessories.  So he ultimately wanted to know, how much is all this stuff worth so I can substantiate it to my insurance company in the event of a loss.  He had already experienced a claim and while he seemed pleased with the outcome he became more aware of the burden of proof on him and the potential for contradicting agendas from both parties (home owner and insurance company) when a loss occurs.  So here he is being proactive getting his ducks in a row.

There are several ways to help clients determine what their general contents are worth ranging from labor intensive detailed work which most people don’t  want to pay for when evaluating “everyday stuff” or you can use new innovative services and technology such as the Home Contents Valuation Application that  ACE Private Risk Services uses for their clients which is unintrusive, complimentary and based on science.  By the way, we (Asset Archives) developed the proprietary technology behind the Home Contents Valuation application.   So, we do an inventory and contents valuation for this client and what happens next is where you and those of you who advise affluent home owners need to pay close attention.

The results indicated that the client had approximately $1,250,000 - $1,400,000 worth of contents.  Upon review, he was concerned that the number we came up with might be low.  So we had an engaging conversation and the discovery was surprising for him and a great confirmation on how you can better serve yourself by knowing what you have and not guessing.  When a contents valuation is done with our new technology, the purpose is to estimate what total general contents are without the time, money and overwhelm involved with a traditional appraisal. (Note:  This does not replace a formal appraisal but rather determine where to focus on appraising if necessary and give you a starting point of value without guessing)  The alternative is to allow your insurance company to place a % on the dwelling for contents which can be totally off base from reality.  (You could be over or under insured).   So like any appraisal and valuation service, if the evaluator is not privy to all available information such as objects hidden in closets for privacy purposes, then it may not give you the whole picture. 

So what did we discover?  Hermes Birkin Bags, Manolo Blahnik shoes, and Wine Bottles (>$1,000/bottle) to name a few. 

Here is where Paris and Sex in the City relate.  In 1981, Hermès chief executive Jean-Louis Dumas was seated next to Jane Birkin on a flight from Paris to London. She had just placed her straw bag in the overhead compartment of her seat, but the contents fell to the ground, leaving her to scramble to replace the contents. Birkin explained to Dumas that it had been difficult to find a leather weekend bag she liked. In 1984, he created a black supple leather bag for her, based on an 1892 design. She used the bag for herself then later changed her mind. Nevertheless, the bag has since become an icon. (Source Wikipedia)  These bags range from $5,000-$150,000.  Manolo Blahnik is a Spanish footwear designer.  In the 1970s, when chunky platform shoes and boots were the mainstream footwear styling of the day, Manolo Blahnik turned back his attention to the stiletto heel, which has remained the brand's mainstay to this day. Manolo Blahnik shoes have rapidly become a symbol of pure classical style for the 21st century.  (Source Wikipedia)  The TV show:  Sex in the City made the shoes wildly popular.  Sarah Jessica Parker’s character is a collector of the shoe and sports them in the majority of the episodes.  (My wife reminds me that she is making space in her closet for a pair of Blahniks)  These shoes range from $550- $15,000 a pair.  These are just two examples of what we discovered in the conversation with our client once he used the Contents Valuation application. 

The result:  A productive conversation with a client who is now motivated since he sees with his own eyes the disparity in own calculations whether 50% of his home is even right.  Now since he was in an apartment, the arbitrary % was not applicable but here is the real shocker.  His contents coverage was $200,000.  When we accounted for the Birkin bags, other luxury accessories and wine, it increased the total contents value we originally estimated by $550,000.  So he should plan for $1,700,000 - $2,000,000 in contents. That’s a pretty big difference.
How does this story end?  Client is raising his general contents coverage and getting some blanket coverage to address any gaps on specific items or categories for effective coverage, on top of the art and jewelry he already scheduled.

Here are questions you need to ask:
*do I have a good grasp of what my general contents are worth?
*how comfortable am I with the value my insurance company has determined my contents are worth?
*have I considered how much I may have in areas such as luxury accessories (handbags, clothes, shoes)?
* how does my insurance company deal with certain collectibles like wine that are typically consumed but still worth a lot of money?
*how could I quickly determine an estimate for what my total contents are worth without going through a process that feels like I am sticking toothpicks in my eyes?

Client happy, check.
Agent happy, check.
Are you sure you know what you have?  You better check.

To learn more how you can get a Contents Valuation Assessment feel free to call me.  404-229-3996, that’s my personal mobile phone so that I make sure I am available as best I can. 

We’ll do another post soon about how much a Master Bedroom can eat up in the total contents value of your home. 

The Most Important Lesson learned from this client experience?  No matter how wealthy you are, you just want to be treated fairly by your insurance company when shit happens.  (Yes, excuse the language, but that is the bottom line)  Birkin bags, shoes or wine don’t mean anything when you have a significant loss but how you get treated by the company you are paying to be there when you do have a loss is what is most important. 

Happy Friday,

Gerald