Insuring physical?

[patrickjhall]

I've started a strategy and was curious if others thought it was lunacy or not. I purchased an inland marine rider on my home owners insurance policy. The policy only requires that I specify the type of coin, the value, and the quantity. Not the location of the coins.

I own all american eagles. Coverage is now in place if they are in my home, or if I am transporting them, or if they are in a safe deposit box.

But, I insured 10% of my coins, and have them split across 10 bank deposit boxes/other locations. Seems like a decent way to lower insurance costs and limit "paper" trail exposure.

Am I too cheap for my own good? Any risks other than massive seizures of bullion that I am not considering?

***edited math explanation to try and make myself a little clearer. Sorry trying not to be too specific on how many locations.

[AdamA]

I've started a strategy and was curious if others thought it was lunacy or not. I purchased an inland marine rider on my home owners insurance policy. The policy only requires that I specify the type of coin, the value, and the quantity. Not the location of the coins.

I own all american eagles. Coverage is now in place if they are in my home, or if I am transporting them, or if they are in a safe deposit box.

But, I insured n% of my coins, and have them split across n bank  deposit boxes. Seems like a decent way to lower insurance costs and limit "paper" trail exposure.

Too cheap for my own good?

How much do you pay (percentage wise) for the insurance? 

Did you get the feeling that your insurance company ever really understood what it meant to insure gold bullion?

I have heard from others (I think Gumby posted some very good information at this) that it's better to use a company that specializes in bullion.

[patrickjhall]

~1.25% per year. I control the value of the coins- I call periodically to adjust the value(just lowered it with them). They understand that it's bullion and not numismatics, yes.

[Gumby]

I don't recommend insuring a bullion coin collection through a rider on your home owners insurance. They rip you off because it's not something they specialize in. They don't understand the risks, nor are they set up to determine them accurately. They don't even understand what bullion coins really are. So, they charge you more to cover their risk exposure.

You need an insurance broker who specializes in coin collections so that they can properly determine your risk and get you the best deal.

I pay 0.31% of the total value of my bullion coin collection.

All the information you need is found in the following thread:

http://gyroscopicinvesting.com/forum/ht ... ic.php?t=0

[MediumTex]

~1.25% per year. I control the value of the coins- I call periodically to adjust the value(just lowered it with them). They understand that it's bullion and not numismatics, yes.

That seems high.

[patrickjhall]

Agreed that the rate is high.  But remember that is cut  into 10% of my total holdings, to a degree less than 0.31% of total assets actually owned. I am essentially  hedging that more than one location will not get robbed. Gumby I have read your thread and inferred that your policy is only in effect while the coins are in a safe deposit box. Is that not the case? You are covered during transport or if you have them at home?

[AdamA]

Agreed that the rate is high.  But remember that is cut  into 10% of my total holdings, to a degree less than 0.31% of total assets actually owned.

Now I get it...sounds like a pretty good idea.

I'm surprised that your homeowners insurance company understood gold insurance, though, based on what I've heard (check out the link Gumby posted above).

Also, is there a fee at each of the ten banks where you hold a safe deposit box?

Also, is it a pain in the neck to have 10 safe deposit boxes at 10 separate locations?

[Gumby]

Agreed that the rate is high.  But remember that is cut  into 10% of my total holdings, to a degree less than 0.31% of total assets actually owned. I am essentially  hedging that more than one location will not get robbed. Gumby I have read your thread and inferred that your policy is only in effect while the coins are in a safe deposit box. Is that not the case? You are covered during transport or if you have them at home?

That is correct. The coins never travel anywhere, so it works for me. If I need to add transportation, or another location, I just make a phone call and they adjust the policy on the spot.

I don't know. The potential for insurance fraud aside, seems like owning ten safe deposit boxes would be more expensive than fully insuring $100,000 in gold bullion in a single safe deposit box.

[patrickjhall]

Also, is there a fee at each of the ten banks where you hold a safe

Yes but the math still works out to well less than 0.31% combined with the premium.  

Also, is it a pain in the neck to have 10 safe deposit boxes at 10 separate locations?

It's not that many. Consider it an illustrative example. I am trying to limit specifics for personal security. Not doing a very good job of that nor getting my point across it seems. But the math again is such that I am paying less than .31%.

[AdamA]

Also, is there a fee at each of the ten banks where you hold a safe

Yes but the math still works out to well less than 0.31% combined with the premium.  

Also, is it a pain in the neck to have 10 safe deposit boxes at 10 separate locations?

It's not that many. Consider it an illustrative example. I am trying to limit specifics for personal security. Not doing a very good job of that nor getting my point across it seems. But the math again is such that I am paying less than .31%.

Gotcha. 

It actually seems like a pretty cool hack to me. 

[patrickjhall]

The potential for insurance fraud aside.

Right. My reasoning on this is I am under no location restrictions. I don't have to specify where anything is. But yes, this is my greatest concern.  Being denied a claim for some reason though I can find no language in the policy that may be cause for denial.

Explaining  this does make me feel like I am being too cute for my own good.

[AdamA]

Explaining  this does make me feel like I am being too cute for my own good.

Kirgare--

Sorry it has taken so many posts for me to understand your question.

Why not just call them and ask?  Maybe you could even get something it writing. 

Frankly, though, I think having the coins in a few separate banks, along with maybe a little in an ETF, is probably insurance enough. 

You can't protect yourself completely from every possible disaster. 

[AdamA]

Why not just call them and ask?  Maybe you could even get something it writing.  

In reading that, I realize what a dumb idea it is (calling and asking).

I could just imagine how that phone call would go.  You'd probably be on hold for 4 hours, and get a very noncommittal answer.  

I think if you're spread amongst a few different banks and hold a little in an ETF, you're probably fine.  Yes, you could lose some money if something happened, but you wouldn't go bankrupt.  

[Gumby]

The potential for insurance fraud aside.

Right. My reasoning on this is I am under no location restrictions. I don't have to specify where anything is. But yes, this is my greatest concern.  Being denied a claim for some reason though I can find no language in the policy that may be cause for denial.

Explaining  this does make me feel like I am being too cute for my own good.

I think it's a bad idea. Think about it this way...

Suppose you had two identical million-dollar yachts and you got an insurance policy for just a single yacht — with no location restrictions. Now suppose you decided that it didn't make sense to insure both yachts, because you could just make a claim on whichever yacht got severely damaged first. Would it be insurance fraud? I think it would.

Now imagine the same trick spread over ten yachts. It could be counted as ten counts of insurance fraud.

Insurance fraud can be defined as simply lying or withholding information from the insurance agent or claims adjuster. When making a claim, you'll be required to provide documentation, such as photos, schedules and signed questionnaires. What if they ask you if you have any other safe deposit boxes? What if they discover those other boxes and ask about their contents? It's not out of the realm of possibilities. A quick glance at your credit report will likely show accounts or credit at ten different local banks. That alone may raise some red flags.

Remember, a claims adjuster needs to make sure that you aren't lying about the theft. Depending on the circumstances of the claim, they may want to check to see if you faked a theft and moved the coins to another location or safe deposit box. If they discover you have 10 safe deposit boxes full of bullion coins, my guess is that they will launch an investigation and take you to court.

It might be a good idea to just get a real, legitimate quote from a specialty insurance broker and ask them if they'll give you a better deal by spreading your risk with ten small coin collections spread over ten separate secure locations.

0.31% is a small price to pay for peace of mind and no jail time.

[patrickjhall]

Thanks guys. Gumby - your explanation makes sense. Probably not worth the risks. I'll make some calls.