"Fair Market Value" For Insurance Application

As many of you know, Hugh Wood, Inc. offers insurance for stamp collections. Applicants must indicate the "fair market value" of their collection. I am seeking to insure my U.S. collection. It's relatively modest, respresenting about $4k worth of purchases over the past 10 months. Of these, the highlight is the airmails, C1-C150, all MNH.

I welcome thoughts on what to claim as FMV.

Thanks in advance...

Sounds like a perfect question for your insurance agent.

(in my words) Under the Canada Revenue Act (Canadian Income Tax), Fair Market Value is the highest value a knowledgeable third party would pay. I would suggest that catalogue value would suffice as it is simplistic and understandable. It is also what you would probably have to pay to replace the stamps should they be lost, stolen or destroyed.

Catalog value is acceptable but receipts are also useful. If your stamps are graded you will want to insure for the SMQ value in the case of PSE otherwise you would take a huge hit in case of a loss because Scott catalog value would not even begin to make you whole.

The insurance should cover the replacement value so not likely catalog. A collection of mostly modern US would catalog at 2x face but likely value is no more than face.

Progressively insightful answers - thank you

I would think that your purchase number of $4000 over the lass 10 months would be an accurate number to use, unless you made some exceptionally bad or exceptionally good purchases.

Since when?

I've had my collection insured with Hugh Wood for well over a decade now and I've never been asked the FMV of my collection. They ask how much insurance coverage I want and individual items above a certain threshold ($25K?) need to be itemized. Beyond that however, the only time "value" comes into play is in the event of a claim, at which point I have to substantiate the amount of the damage or loss.

It may seem pedantic but there's a difference between "what is the FMV of your collection" and "how much coverage do you want to purchase"? Those are NOT the same question.

For example, one collector might want to insure replacement value, and another might simply want to cover how much they have spent. It's a nuanced decision.

What is the specific wording you are trying to answer?

Rev - Am I correct in assuming that substantiating a loss involves receipts?

Well, it's like this... I was provided a few weeks ago with a HWI application form dated April 2016 (see attached image). Perhaps their data collection requests evolve with each successive version? Check out the middle third of the page.

The FMV question on the initial application is to provide a basis for their quote. You can choose to insure for any amount you want based on the quote. I have had HW insurance for years, and at every annual renewal I insure for the amount I consider a reasonable replacement cost. I would use replacement cost as the FMV on the application as well.

As was stated, the amount of insurance and value of the collection is only relevant in case of a loss.

For example, if you pay for $1,000,000 of coverage for your "collection," and it is completely destroyed or stolen, you won't be able to collect $1,000,000 unless you can demonstrate to the insurance company that was the replacement value at the time of the loss. If you can only show documentation (scans, receipts, whatever) that covers $1,000, then that's what they'll write the check out for. The same goes the other way. If you pay for $20,000 of coverage for a collection worth $50,000 and it's a total loss, you'll get a check for $20,000.

If you have receipts for $4000, that's easy to document so that should be your coverage. If there's a total loss, you'll be made whole on that $4000. If you have some other stuff also, you can decide whether it's worth paying for additional coverage for that other stuff.

As a note, many policies have an automatic "escalation" built in - they increase the amount of coverage (and the premiums) each year to cover increases in inflation and value. So, a $4000 policy this year may become a $4400 policy next year and a $4840 policy the following year.

Hope that helps.

I am about to insure my collection with Wood and I am sooo happy that I took the time to organize my documentation. Excel sheet with each Scott number, cert number(s), special notes, centering, grades where applicable, SMQ and Catalog value all in catalog sequence. Folders of scanned receipts, scanned certs and photos of every stamp. All constantly backed up on external drives and a cloud. Finally, cert and invoice hard copies in binders. I am ready. Now I pray that I will never need it for a loss but rather when and if I sell or for my heirs.

I'm also considering insuring my collection and determining FMV (or even replacement value) presents an interesting dilemma. Many items in my collection are unique and/or irreplaceable. In one case, I hold the only known PF certificates (three of them) for a color variety of a US stamp (I'm not aware of any others have been certified). Many items in my collection that are listed in the Scott Specialized catalog have only a dash for the value of said items. In several instances, there are no Scott values listed and the items have not come to auction or were listed but not sold at auction. It's not that these items are priceless, just nearly impossible to replace.

How can the FMV or replacement value be determined for items that fall into this category?

Walkman82, This is exactly why I'll repeat my first reply to this thread:



I doubt that any of us here are authorized to give answers on behalf of Hugh Wood Inc., nor are any of the replies, anecdotes, or advice shared here binding on Hugh Wood. It is best to ask him, not third parties. Disclaimer: No, I'm not authorized to give advice either. ;)

John Becker - point taken, thanks.