Insurance Question

Model Railroader General Discussion (Model Railroader)
1

This question is prompted by an earlier post that mentioned that the insurance company was compensating for repairing a layout damaged in a fire. Since I lost or had damaged some of my collectable Lionel a number of years ago and did not have special insurance, could only recoup the original purchase price.

Was wondering how many of you have a rider to cover your model railroad layout and/or rolling stock?

Also, at what value did you decide to take on the extra insurance?

If you have coverage on the layout, how did you determine the value?

I know my insurance company has “collection” riders available, but would like to know other folks feelings on the subject.

Thank you,

Richard

2

As soon as you put something on the layout, it begins to depreciate in value.

Without a rider, most homeowners insurance will cover the actual cash value.

Some less expensive policies will put a limit on reimbursement in the form of a fixed dollar amount such as $5,000 or $10,000.

Rich

3

Richard,

I have full replacement cost on the house and contents. If you ever have a fire, tornado, whatever*, that’s the easiest way to go. They pay you what it cost you UP TO THE LIMITS OF YOUR COVERAGE for contents. You can do whatever you want in terms of actually spending it on what you do replace and what you may want to change in terms of your roster, etc. just as if it was the contents of the rest of the house.

*Note: Floods are special cases when it comes to insurance. If you have a basement or live near the river, in the floodplain, anyway, that will be a whole separate discussion with your agent.

The way I understand it with the layout is they would pay for the replacement cost of the materials. As we all know, labor is a major personal investment of time and energy and you won’t get that back. If you have a built craftsman kit, you’d get the cost of the kit. Tortoises, yes. Wire, yes, Track, yes. 50 lb bag of Scupltamold, yes. The labor? All yours.

But I’m guessing most of us wouldn’t hire a pro layout builder even if that was covered, although I’m sure you could get such coverage if you were willing to pay. Which brings up the issue of special collectible insurance. At least with my carrier, the issue is, “Does this stuff have special value over and above what you paid for it?”

In other words, this is how it would likely break down. Let’s say you’re like me, have maybe 4 or 5 brass locos of no particular value over and above market prices. They run on the layout, not sit in a case or vault. That’s going to be covered as described above.

Let’s say you’re someone who has made brass your passion throughout your life. You have a collection of literally hundreds of locos, cars, and even a brass bridge or two. Many are one of a kind, lots of them you’ve had for years and they’ve appreciated nicely from what you originally paid. In other words, this is stuff whose value is going to exceed replacement co

4

We had a house fire in '99 (lightning caused) but I was not in the RR mode then. We paid our deductible ($1000 then) and then were covered for repair, plus replacement value for typical personal property damaged. This was an important rider, as noted depreciation would otherwise have clobbered us (e.g., TVs, clothes, beds, etc). Equally important is whether the insurance company treats you as a trustworthy customer or someone to maneuver. USAA was very reasonable; i.e. they paid for equivalent replacements.

I haven’t looked at whether hobby items would be limited (as jewelry is) so don’t know whether they would cover replacement materials cost (but not labor). I better check, maybe I need a rider, or at least should understand the rider cost vs. risk involved if I opt to not have a rider.

Glad the OP asked the question!

5

Last year when I was moving my collection to its new home, I had visions of the contents of my 8x14 utility trailer splattered all over the interstate. Since it would take three trips I figured that was 3 times the risk. So I called up the insurance company commissioned by the NMRA that specializes in MR insurance. The value was determine by exactly what I turned into them on a spreadsheet. Some things were rated at much more than I paid, and others showed the depreciation of normal toy junk. I have the whole collection/layouts ensured at the stated value, but I figured there was not much chance of the whole kit and caboodel getting stolen or destroyed at once so I put a $ cap on the policy. That saved on the premium.

The company was very helpful in figuring out what policy was best for my situation and collection.

6

That’s a good thought, about a NMRA recommended insurer. I rent here and have had renters insurance but let it lapse. I am now considering picking it back up, especially since my collection has expanded considerably over the last five years. I don’t know, however, about the worth of much of my stuff. Also, how can you place a value on a scratch built structure?

7

There are two ways. One, it’s the value of the materials used in it’s construction. You would get some of the value back – depreciated – with standard coverage. If you want the full purchase price, then you get the replacement cost option, which costs a little more, but you would be compensated for the actual cost of the materials to you Second, you can get special collection coverage on it by stating a value, then paying for coverage of it at that value. This will be a higher cost than full replacement cost, because you will be ensuring for value over and above what you paid for it.

The only catch will be what the ins. co. policy is on covering special collections. Some may not cover items that were never in the market and can’t be priced accordingly or have other limitations on such coverage.

8

We do have insurance on the monastery and church of course, but the stained glass windows are not insured. They are irreplaceable, so there is no point in insuring them.

ROAR

9

I pretty much subscribe to the theory of self-insuring for the minor bumps in life, and making sure I have decent coverage for catastrophic losses - losses that would take away from my family’s future. I think that there is a tendency to try to insure for “sentimental value” and “emotional attachment” rather than staving off financial ruin. That said, there are many places such as my automobile policies (comprehensive section), where it makes little sense to take a high deductible because of the pricing the insurance company offers.

Therefore, my starting point becomes how much of a loss (deductible) can the family afford to take when the downside of life happens? Since trains are my personal hobby, and not the family’s, I carry no insurance beyond the standard replacement cost on contents of my homeowner’s policy. The most likely events to happen are 1) fire or wind storm destruction of the house, and with it the layout, locomotives, and rolling stock; and 2) theft of locomotives (and some high end unopened kits), which may or may not coincide with theft of other items in the house. Unless the thief is a model railroader (quite rare), models in the display case would be the obvious target along with other high-value, easily removed items in the house (cameras, electronics, sporting goods). Bottom line is that loss of my hobby items are not a financial catastrophe for the family, especially in light of what other losses are likely to occur at the same time.

As an example, loss of the computer itself is not a particular problem - loss of certain data (tax, insurance, financial records) is. Loss of photos on my hard drive is an emotional loss, but not a real financial loss. So I need to keep duplicates of key records (but not necessarily photos), hopefully in a format and place where they will survive the likely disasters.

When the loss comes, insurance can only cover the financial loss. Insurance can

10

Fred,

Excellent point on figuring out what the purpose of insuring your model railroad items is in each person’s particular case. With insurance, you can get a variety of options, but beyond the most basic will cost you. The thing about costs is they are often quite nominal for additional coverage. You’ll likely not miss the difference when paying it out, but if you really wanted better coverage after a loss, you sure can’t fix that in retrospect.

That said, it’s real easy to take additional coverage too far. Your own standard of covering a catastrophic loss is a good way to size things up. I think there’s another aspect of your advice that’s important, too. If you approach things with that belief, you’re much less likely to be one of those folks who makes claims for even the smallest loss. A couple of rounds of that and you’ll find your premiums growing more expensive. If you end up just writing off that $500 brass loco that crashed to the floor, you may end up saving more over the long run than you’ll pay out in additional premiums.

Sometimes just saying, ‘That’s life, gotta be more careful…’ is the best solution for small claims. If you’re only really worried about the worst case scenarios that would affect your continuation in the hobby, your insurance costs will remain very reasonable or perhaps be well-covered enough under your household policy that there’s no need for additional insurance. That’s pretty much where I found myself after sizing things up.

11

My insurance guy said he will not insure my layout as the value is under $150.00, needless to say I have a lot of used, free, scratchbuilt, castoff equipment, lots and lots and lots of brass track, so now with money saved from no insurance payments that leaves me with $20.00 to spend at train shows.

12

Really, insurance is all about acceptable risk. Generally, people throw money down the drain when they buy insurance. You want insurance against catastrophic loss caused by events beyond your control. If you try to insure every little thing, you’d be better off putting those additional premiums into a reasonably safe investment somewhere. If you need the money, it’s there; if you don’t you have a nice windfall to spend on something else.

13

Fred,

Excellent point on figuring out what the purpose of insuring your model railroad items is in each person’s particular case. With insurance, you can get a variety of options, but beyond the most basic will cost you. The thing about costs is they are often quite nominal for additional coverage. You’ll likely not miss the difference when paying it out, but if you really wanted better coverage after a loss, you sure can’t fix that in retrospect.

That said, it’s real easy to take additional coverage too far. Your own standard of covering a catastrophic loss is a good way to size things up. I think there’s another aspect of your advice that’s important, too. If you approach things with that belief, you’re much less likely to be one of those folks who makes claims for even the smallest loss. A couple of rounds of that and you’ll find your premiums growing more expensive. If you end up just writing off that $500 brass loco that crashed to the floor, you may end up saving more over the long run than you’ll pay out in additional premiums.

Sometimes just saying, ‘That’s life, gotta be more careful…’ is the best solution for small claims. If you’re only really worried about the worst case scenarios that would affect your continuation in the hobby, your insurance costs will remain very reasonable or perhaps be well-covered enough under your household policy that there’s no need for additional insurance. That’s pretty much where I found myself after sizing things up.

This is the way that most companies prurchase insurance.

Peter Smith, Memphis

14

Once upon a time, a man bought a box of $1000 cigars. He insured them for $20,000. After he smoked all of them he went to the insurance company to collect on his fire insurance.

The company was quite aghast, and the man had to sue them in order to collect. The judge told the insurance company that they did indeed have to cover the loss since fire was a foreseen risk. The insurance company paid up, but before the man could cash the check, the sheriff was there and arrested him on 20 counts of arson.

ROAR

15

When I experienced a house fire with about 55% loss and the remaining 45% damaged beyond salvage, I had no rider for anything and received only up to the value of my contents coverage. I was not required to try to “salvage” anything as ti was considered a total loss. I had full ‘replacement’ coverage.

I was required to make a list of ALL belongings lost at the price I paid for them, the year I bought them, and list of how much it would cost to to replace them.{or best guesstimate}

For anything OVER the insured amount, I was allowed to take off my taxes for that year…only it turned out to be a portion of a part of the percentage of the unreimbursed amount! NOT the whole amount unreimbursed! BOY was I burned on that one!

Now fast forward to today. The coverage I have includes depreciated amount reimbursement, as at least my current insurance company does NOT offer “full replacement coverage” anymore . How they calculate depreciation is a question I should ask at the next “evaluation of coverage” meeting.

MY best advise, having gone through it is to:

1} get the best coverage you can afford,

2} get a rider for your MRR train investment based on the current “value” of the trains however the insurance company requires ti to be evaluated.

3} get a rider for anything ELSE valuable you own.

4} TAKE PICTURES of THE whole house, each room, closet, layout, from several angles and keep these OFF SIGHT {do not worry if it is “neat” or “organized” it will give you a reference to go by in listing your items as well as some “proof” you owned them…Just take them!!!}. I even took pictures of damaged stuff to jog my memory as I listed the items.

5} make a LIST of items of particular value, or that there are many of, save receipts if you can, KEEP OFF SITE {like a safe deposit box at the bank}

6} BTW; IF YOU ARE A RENTER.