Understanding Specialty Insurance

Although we all hope to keep ourselves and our belongings safe in today’s fast-paced world, the possible adverse scenarios are abundant – your new camera is stolen, your watch goes missing, or your bike is damaged in an accident. Today, there are three main ways people can protect their specialty items (i.e. their valuable personal belongings such as bikes, scooters, jewelry, and electronics):

1. through their base homeowners or renters insurance
2. with the addition of a scheduled personal property on their homeowners’ or renters’ policy
3. through the purchase of after-the-sale specialty insurance

Homeowners or Renters Insurance

An existing homeowners’ or renters’ policy is the default insurance mechanism for a lot of people. These policies generally provide good cover for homes and apartments, but are usually inadequate for specialty items. Policyholders face limitations that are often only uncovered upon submitting a claim and being denied due to an obscure footnote buried in the policy’s fine print.

In typical homeowners’ and renters’ policies, common limitations include: a value limit on individual items (coverage limit may be between $500 and $1,000 for a single item); limited or no protection for items away from the home; and no protection at all for certain items.  Homeowners’ and renters' claims typically also require a deductible (your out-of-pocket payment before the insurance company starts to pay). For example, it’s common to have to pay a deductible of $500 to make a claim on a $1,000 eBike, which means it’s often not worth claiming on these policies given that your premium may also rise.

Scheduled Personal Property

Another option is to add a scheduled personal property or floater (named so because the policyholders essentially float coverage to a specific item) to your homeowners’ or renters’ policy. Though it may sound strange, it simply means you add an individual item (such as your bike, watch, engagement ring etc.) to your homeowners or renters insurance, pay any required uplift in premium, and in return receive additional coverage that may be more appropriate for certain valuable items.

Different companies use different language to describe exactly what they cover, so it’s important to properly check with your insurer on what additional coverages are offered and whether the scheduled personal property is covered at full value.

Even with scheduled personal properties, homeowners’ and renters’ policies often do not include coverage for specialty risk areas, such as liability and medical payments for bikes or unexplained loss for jewelry. Claims often also increase the base homeowner or renter premium in the following years, which means consumers often need to decide between making a claim and preventing a hike in their annual premium payment.

You may also see the terms “rider” and “endorsement” flying around in the insurance world. These are similar to a scheduled personal property or floater, with one main exception. Instead of extending coverage to individual items, riders and endorsements extend coverage to certain categories (e.g. a collection of jewelry).

So…rider or floater? Well, there is another option!

Specialty Insurance

Due to the limitations of other options, consumers may choose to purchase specialty insurance to ensure their valuables are adequately protected. These insurance policies are designed to cover your individual items for risks specific to those items which are usually excluded in homeowners’ and renters’ policies. The key features of these policies include:

• Ability to actually cover your item. It might sound obvious but for some specialty items your homeowners and renters policy may not actually provide any coverage. eBikes are a great example - many models are often excluded from homeowners/renters policies and cannot be added with an endorsement.
• Proper coverage for your items. When your policy does allow you to add the product, an endorsement extends the coverage limits for certain risk areas (e.g. theft and loss), but most still do not provide the necessary product-specific protection required. Specialty insurance provides bespoke policies for each product, rather than a blanket coverage.
• Protection of premium when making claims. Claims on a homeowners policy, even with a floater or endorsement, may increase your overall premium. With specialty insurance, your homeowners’ or renters’ premium and coverage stays the same, even if you file a claim.
• Replacement, not just reimbursement. With specialty insurance, your items will often be replaced with the same kind and quality without considering depreciation of your assets. In contrast, homeowners’ or renters’ policies typically return a claim in the form of a check for the amount the jewelry is insured for, regardless of its actual value, and leave the onus on you to try and find a replacement.
  

Homeowners’ and renters’ policies are absolutely essential and every resident should have one – they are necessary to protect your home and the general property within it. However, consumers should be aware of the coverage gaps in their policies when it comes to insuring their valuables and on-the-go items, and should seek out specialty insurance to get proper coverage.

At Oyster, our goal is to eliminate these coverage gaps and ensure consumers have the proper protection for their valuables. In the following articles, we’ll describe the different specialty insurance policies for your personal belongings across bikes, jewelry, collectibles, and electronics. If you’re interested in learning more about specialty insurance or Oyster’s modern insurance products, send us an email to chat with an Oyster insurance expert!