Are your guns properly insured?

[moredes]

The thread titled, "my guns were stolen" prompts me to write this. This is not a flame, I'm just passing on what I learned about pprotecting the financial investment portion of my gun collection.

I have State Farm Homeowner's insurance, and Amica Auto Insurance. Any loss of firearms (fire or theft) that I suffer is covered by my generic homeowner's insurance (renter's insurance may be basically the same in coverage rules, except for the limits). There is a limit though, and it's $2500 per gun, up to a total claim of $5000. The deductible is $1000. That is, if I were to lose 3 guns in a fire, i. e., Gun A ($3000), Gun B ($3500), and Gun C ($2900), the homeowner's policy (in the best circumstance) would cover Gun B and Gun C for a $2500 loss each, limited to the total of a $5000 loss. After the deductible is considered, I'd get a check for $4000, "unless they could replace the guns for less" (right; this is under the condition that I could prove the model of guns lost, and therefore establish a value. Digital pictures will suffice.).

If the guns are stolen from my car, auto insurance wouldn't cover a cent of the loss. Both Amica Auto and State Farm Homeowner's agree about that; the limits of my homeowner's policy would dictate my coverage for loss (fire or theft) from the car, no matter where the car is located at the time of the theft. It seems that the standard in the insurance industry is that the homeowner's (renter's too?) policy is THE policy that covers firearms losses no matter the circumstance (up to the limits of a standard policy, which I've just explained).

Therefore, I must (and have) add a rider (aka 'floater') to my homeowner's insurance, specifying each firearm I want covered--serial number, model, maker, description, and value. Under such a rider, only the specific guns I itemize are insured for losses up to the full value I claim; any number of itemized guns with no upper limit and no deductible.

Under this scenario, if I itemized only Gun A and Gun B under a rider policy, if Gun A, Gun B, and the Gun C were stolen from either home or car, I would receive full declared value of Gun A and B ($6500), and $1500 for Gun C. Gun C would fall under the still-in-force general clause covering firearms, which is part of the regular homeowner's policy. Having a rider in force does not negate the regular firearms coverage provided by the homeowner's policy.

That "general homeowner/renter's insurance" coverage (would equal a $1000 deductible, $2500 limit per gun to a maximum of $5000) in this case, for an unitemized Gun C, $2900 limited to $2500 minus $1000 deductible, or $1500.

I've got a few guns, but losing almost any combination of any 3 of my guns at once would cost way more than the yearly insurance rider fee ($272/year for $16,000 insurance).

Do you remember the Oakland Hills fire in ~1989 ? Two art collectors had a collection of art and collectibles worth purportedly $15 million (that's fifteen million dollars) worth of art and collectibles displayed in their house. I saw that collection. A friend had to house-sit it about a year before the fire. Just musing, I asked how much insurance costs were, because it felt like I'd stepped into the damn Huntington museum. One of the occupants said, "Oh, we don't have insurance. It's too expensive; about a million five a year." I thought, sell a painting, idiot. You guessed it. They made the news with their tale of woe, and got their 15 minutes of fame. The house and all its' contents burned untouched, to the ground.

The moral is, spend a gun or two and buy a safe and get insurance to "save" the entire rest of your collection.

[Hkmp5sd]

I have a rider on my policy with replacement cost of the gun, not a fixed value. That's one reason I stick with that company, as no one in this area, including them, sell replacement policies any longer. The last big hurricane ended that.

[Rembrandt]

I'm not a big fan of Gun Insurance. Some years ago a number of break-ins in the Chicago area revealed an Insurance Company employee going through client records and selling the information to criminals....the bad guys knew what was in every house they hit.

The other reason is that it leaves a paper trail for all your guns. If your collection is sizeable and left to your heirs, they may be liable for paying inheritance taxes on the entire amount....how would the IRS know?....all they have to do is get the Insurance Company records of your collection that most people so willingly hand over to their agent.

If security is a concern, put the money you would have spent on insurance premiums into the purchase of a fire proof safe, motion detectors and alarm system. Besides, what you would have spent on the safe is all tax deductible if you store your income tax records in with the guns....

[Hkmp5sd]

what you would have spent on the safe is all tax deductible if you store your income tax records in with the guns

I didn't know that. Wonder if I can get a retroactive deduction since I bought my last safe about 10 years ago.

I have the safes, monitored alarm system, furry noisemaker in the house, and even a neighborhood watch program. While I can minimize the odds against theft or fire loss, I cannot control the hurricanes blowing through Florida every year, so I also carry insurance.

My insurance company does not have a list of my firearm collection just as they do not have a list of my CD collection, NASCAR memorabilia collection (which due to Dale Earnhardt's death last year now almost equals the value of my gun collection), my computer/software systems or a list of the 2000+ books I own.

I have riders on all of them and all I need to do is show proof that I owned them if they are destroyed/stolen. I have photos, videos, receipts and itemized listing of everything stored in a safe deposit box should something happen. Since my most valuable toys are NFA weapons, I also have the government's proof I own those weapons.

[Drizzt]

I thought about this the last time I moved, so I called USAA to ask if I needed a rider on my Renter's policy for my guns. They told me that their homeowner's policy (which is what my renter's policy actually is) covers all losses, up to the full value of the policy. I was specifically asking about guns for the potential rider, just to make sure there was no misunderstanding. I was definitely pleasantly surprised.

[jimsbowies]

First, as to total coverage, you really do need a "rider" that identifies the actual pieces you have, full description with serial numbers, etc. Then you insure to specified value. Secondly, there are other sources of additional insurance...first, NRA members get some basic level of coverage (as I recall) just for being a member. Then you can purchase additional insurance through their brokerage firm.

Remember too that many homeowner policies have ceilings or limits on what they pay for "collections" of any sort so you need to carefully read your policy and determine not only if your firearms collection has sufficient coverage but your knives, cameras, art, carvings,etc....do as well. If they fall under the loose definition of a "collection", there are many times very, very restrictive limits on what your insurer will pay.

If you are a former military officer (or nowadays, a number of other categories), suggest you get your coverage through USAA...they tend to be more liberal in their definition of "collections".

[moredes]

Drizzt,

You said, "They told me that their homeowner's policy (which is what my renter's policy actually is) covers all losses, up to the full value of the policy."

As I understand it, the insurance industry has a standard clause covering 'collectibles' in the homeowners' policy; in our case, $2500 per gun up to a "full value of the policy" 'for collectibles' of $5000.

I read your quote to infer that your impression is, the insurance company 'covers all losses to the full value of your loss' because your loss would theoretically be less than the full value of the policy (if I'm read your post correctly). I'm pretty sure that's not how they'll interpret it when the loss is claimed.

And I didn't know the NRA offered gun insurance. That's one thing I'll definitely check. By the way, my guns are safe from theft at home (as safe as they can be in a 900lb fire-proof safe). It's theft from the vehicle that prompted me to get insurance. There was an incident about a month ago where some thieves broke into a truck and stole a Perazzi and a Kreighoff. The victim is out about 13 G's.

I'm not worried about insurance clerks selling my address. That likelihood is pretty minimal; besides, the guns are insured. As for the IRS, inheritance taxes on my guns will be minimal considering all the other real property that will transfer.

[popeye]

I recently took a policy for $8000 from NRA they also include a free $1000 coverage as a"perk" for membership, for a total of $9000. The only up front proof of owner ship they require is any single gun worth more than $1500. I'm in the process of taking pics of gun I own and gathering receipts to scan. All pics and scans I will burn on cd. Any other recommendations?

[C.R.Sam]

Keep records up to date.
Make multiple copies....
At least one of which is stored off site.

Sam

[TaxPhd]

I am loathe to do this, as so many people seem to get bent out of shape when I address tax issues, but here goes . . .

Rembrandt,

You stated:

"If your collection is sizeable and left to your heirs, they may be liable for paying inheritance taxes on the entire amount."

A point of clarification and a comment. We don't have an inheritance tax (which would be paid by those in receipt of the property), we have an estate tax that is paid by the estate. Estates under $1 million (this number keeps changing) will not be subject to estate tax, as the estate tax will eliminated by the Unified Credit (assuming that the credit has not been previously used up on gift taxes for gifts greater than $10,000).

With that said, the estate tax has been repealed for those dying after 2009. So, in 2010 and later, it is a non-issue.

You then stated:

"Besides, what you would have spent on the safe is all tax deductible if you store your income tax records in with the guns...."

This is a common belief, but unfortunately, it is incorrect.

For a safe to be deductible, it must be used to produce or collect income that must be included in your gross income, or
to manage, conserve, or maintain property held for producing income. An example given in the instructions to the 1040 is the deductibility of a safe deposit box. This is if the safe deposit box is used to store such things as stock certificates. If the safe deposit box is only used to store heirloom jewelry, no deduction would be allowed.

The periodic selling of a gun for a profit would not be considered "production of income." Because the purpose of holding the gun was not for investment. The profit was incidental. Storing stock certificates in a gun safe would not make the entire safe deductible. A small portion, yes, but not the whole thing.

[biere]

My insurance company is getting to be a pain, I renewed with them, and only have had them for one year previous as I finally got my own place last year.

In order to keep same coverage from last year to this, would have cost a lot more.

Dealing with the local office guy is fine, but getting things like paperwork done with the main office that is a ways away sucks, and even dude at little local office admits he has no clue how long it can take to do stuff.

I used to have a rider for my firearms, and I only had to prove I had the firearms after they were burned or missing. This is what I was told, never had to use it.

Nothing like mags and scopes was included, those fit somewhere else no one else could really decide.

I plan to most likely join some gun organization, even the dreaded nra, for the gun insurance perk.

Next year I plan to hopefully find a better place to deal with, maybe sooner and then I might cancel what I have.

Getting outbuildings covered is near impossable, they won't even pay what it would cost to clean up a burned down barn.

From dealing with this and other companies I have learned what is said in a phone call means nothing till I see it on paper and it is covered properly.

Check things well, ask lots of questions, and ask about the limits like someone is explaining above. When I first asked, I thought normal policy would be cool, but then when I mentioned 5-6 grand in guns, oh well that requires a rider. So did a specific amount of coverage for tools.

I despise insurance, I do have a soso safe, and a good small fireproof one.

Lots of documentation, receipts, copies stored off site, and most of all keep your cancelled checks for when they try and drop you completly due to late payment.

Sorry, dealt with insurance people today and I felt so much like I was hitting my head against a wall because what I wanted for answers were not possable without paying hundreds or thousands more in coverage.

[Rembrandt]

TaxPhd, thanks for the clarification....you're correct, the estate tax is sometimes refered to as the Inheritance Tax....my uncle passed away a few years ago and left a sizeable estate (20M) which probably explains why his guns and other collectibles were added to the mix when it came time for the Tax man to get his. Correct me if I'm in error, but the estate tax is set to fade out by 2010, if Congress does not take action it will go back into effect at that time....correct?

Was not aware of the details concerning what was required to deduct the cost of the safe on taxes....since mine is used for storing records on other investments, must be why my accountant used the safe as a deduction. Thanks for the insight.

[SixGunner]

Well guys, I'm the one who started the "My guns were stolen" thread. I have a renters policy with USAA that covers up to $3000 on guns (I had approximately $2500 in guns here total). If past history with USAA is any indication, I'll be okay.
Deductible is $100.00. I just have to send them as much info on the guns as I can, including pictures and recipts if I can find them (adjuster told me "Do the best you can.") I found recipts on all but the Shotgun, and I have serial numbers on all three.

Lesson here - TAKE PICTURES OF YOUR GUNS! I'm going to take the pictures of the ones I still have, write the info on the back, and keep them in a safe deposit box. Keep the recipts for the guns and all custom work too.

[GnL]

You might want to verify your policy in writing. I also have a Renter's insurance policy through USAA and mine specifically limits coverage of firearms to $2,000. You might be right, but better to have it in writing then to rely on somebody's opinion on the telephone.

[Drizzt]

GnL, is your policy a renter's policy, or a modified homeowner's? I thought mine was simply a renter's policy until I spoke w/ USAA. And they were very specific that the coverage did extend to the full value of the policy.

[GnL]

Drizzt--

Mine is called a "Renter's Insurance Policy." The coverage I selected is fairly bare bones, as I don't have a lot of valuable stuff laying around, so maybe that is why I am limited to $2,000 on guns.

I've thought about increasing my gun coverage, but now that I own a nice safe I have decided to take my chances.

[SixGunner]

On my policy, I had them up the limit on guns to $3000. $2000 is the base limit. You can increase the limits in the individual categores (guns, computers, etc.)

Seemed sensible at the time. I lost approximately $1300 worth of firearms so the extra coverage didn't help, but it might the next time.

I've also got to call the NRA about their insurance. I didn't even know about that until I read this (though I am an NRA member).

[gryphon]

GReat info, guys. I'll be calling my insurance agent on Monday and getting some info straight.

I want to make sure that I'm "getting what I pay for".

[grampster]

Been in the insurance biz for 34 years. Insurance laws and policy coverages will vary from state to state, policy to policy. A. Call your agent and have him explain your policy as it relates to "special limits on certain property". B. Then act upon his best advice. C. Get a good HEAVY bulky gun safe that would take at least two people and a hydraulic cart to move and that ranks high with national underwriters for maintaining temperature integrity for at least 30 minutes in a fire. (be carefull not to be fooled by "average temperature", you want a safe that maintains a safe temperature for at least 30 minutes) More than likely you will keep other stuff in the safe besided firearms.

grampster

[farmersagent]

Just wanted to give my two cents regarding the issue between insuring your firearms on an inland marine policy verses a homeowner’s floater.

In most cases your can increase the limits on your homeowners insurance firearm floater and it won't cost that much more a year. Keep in mind the following when you do this:

The firearms coverage only pays for the firearms should they be stolen or in a fire. If the peril isn't listed under the homeowners covered losses, the firearm will not be covered.

Any claim you make will be subject to your deductible. That means that even though you have a $5000/$10000 floater on your homeowner’s policy you'll still have to pay your deductible, which in most cases is 1% of your dwelling amount.

Should you have a loss that falls under the covered peril clause and let's say your firearm as worth $12,000 they will only pay you the maximum amount per firearm (in the case above, that's $5,000) minus your deductible.

The benefits of having a personal inland marine policy:

In most cases an inland marine policy will cover any peril and there is no deductible.

Each firearm is insured and listed separately, which means if you insure your
Colt Single Action .45 for $1800 that's exactly what they'll pay should you make a claim.

Inland marine policies tend to be on the pricey side, but if your willing to pay hundreds or thousands of dollars for your firearms, aren't they worth insuring??

[email protected]

[Rivers]

Rembrandt, TaxPhd: Unified credit for 2006 is equal to $2M in property; annual gift exclusion is $11k. (Might be more than $11k now; was $11k in 2004.) The "Unified Credit" is no longer a unified credit, as the gift exclusion remained static @ $1M.

Unless the Congress, in it's Infinite Wisdom, makes the Estate Tax death permanent, then we of great wealth are in trouble in 2011.

[Rimrock]

This thread is loaded with valuable info! Thanks all!
A safe is essential for every serious gun owner but it obviously doesn't stop there!
I'll be making some adjustment based on what's been said here!

Rimrock

[timinkc]

I'm an agent in missouri, and I know with my company guns are covered as personal property (replacement cost or ACV), and the exclusions only apply for loss by theft... scheduled guns adding coverage for theft is one of the most expensive coverages a person can buy... it seems that when a house is robbed all of the guns seem to be stolen as well... the majority of agents i know with alot of different companies will refuse to write insurance on over $10,000.00 of guns... i do but only on a case by case basis (is there a safe, is it secured down, is it a good safe, or a $500 walmart special, do these people seem to have thefts alot, etc etc.) it seems like people don't get robbed to often for tv's anymore, but i've seen lots of gun thefts. it's a shame, but in the world we live in today not everyone is as honest as they once were, so insurance companies have to protect themselves... i've met lots of people, who wouldn't steel from their neighbor, but think defrauding an insurance company is no big deal. the real sad part about this is all the people who know nothing about the coverages they pay for...some pretty poor insurance agents out there.

[timinkc]

I'm an agent in missouri, and I know with my company guns are covered as personal property (replacement cost or ACV), and the exclusions only apply for loss by theft... scheduled guns adding coverage for theft is one of the most expensive coverages a person can buy... it seems that when a house is robbed all of the guns seem to be stolen as well... the majority of agents i know with alot of different companies will refuse to write insurance on over $10,000.00 of guns... i do but only on a case by case basis (is there a safe, is it secured down, is it a good safe, or a $500 walmart special, do these people seem to have thefts alot, etc etc.) it seems like people don't get robbed to often for tv's anymore, but i've seen lots of gun thefts. it's a shame, but in the world we live in today not everyone is as honest as they once were, so insurance companies have to protect themselves... i've met lots of people, who wouldn't steel from their neighbor, but think defrauding an insurance company is no big deal. the real sad part about this is all the people who know nothing about the coverages they pay for...some pretty poor insurance agents out there.

[timinkc]

I'm an agent in missouri, and I know with my company guns are covered as personal property (replacement cost or ACV), and the exclusions only apply for loss by theft... scheduled guns adding coverage for theft is one of the most expensive coverages a person can buy... it seems that when a house is robbed all of the guns seem to be stolen as well... the majority of agents i know with alot of different companies will refuse to write insurance on over $10,000.00 of guns... i do but only on a case by case basis (is there a safe, is it secured down, is it a good safe, or a $500 walmart special, do these people seem to have thefts alot, etc etc.) it seems like people don't get robbed to often for tv's anymore, but i've seen lots of gun thefts. it's a shame, but in the world we live in today not everyone is as honest as they once were, so insurance companies have to protect themselves... i've met lots of people, who wouldn't steel from their neighbor, but think defrauding an insurance company is no big deal. the real sad part about this is all the people who know nothing about the coverages they pay for...some pretty poor insurance agents out there.