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Fashionably Insured? What to Do When Your Couture Needs Coverage

clothes on a rack

You don't have to be a fashion model to have acquired a few pieces of haute couture over the years. A designer dress or Hermes handbag, or maybe even a pair of Manolo Blahnik shoes?

High fashion can be a definite investment and it's one you may be surprised to learn isn't necessarily covered by your homeowners policy. True, most policies cover clothing, but in a general, average-person sense. To find out your entire wardrobe is only covered for a few thousand dollars could leave you feeling insulted. 

So, how do you insure your favorite designer pieces? If it's just one or two pieces, a rider to your insurance policy may be the best solution. The outfit will need to be appraised and then you can work with your insurance agent to see what coverage you need. This is still a common practice for fur coats, although wearing real fur has fallen out of fashion as of late.

Still, the concept is the same.

If your closet looks more Rodeo Drive than a day at the rodeo, then you might want to consider designer clothes insurance.

Couture, not just clothing

shoes and purses

In 2015, the American International Group launched its wearable collections coverage insurance program for high net-worth clients.

According to AIG’s Knowledge and Insights article How to Safeguard Couture Collections, its AIG Private Client Group had identified vulnerabilities among its high-worth clients whose designer clothes are valued in the hundreds of thousands of dollars.

These clients would suffer great loss in the event of property damage.

“Just as a collection of vintage automobiles has different coverage needs than an everyday car in the driveway, we realized that couture and bespoke clothing needed to be safeguarded differently than ordinary household items,” says Ron Fiamma, vice president and global head of private collections for AIG Private Client Group.

So what’s covered?

AIG’s policies cover a wide range of clothing from ready-to-wear garments to historic clothing and work-in-progress couture and shoes — and much more.

Unlike traditional homeowners policies that exclude damage from floods, moths, vermin, theft, accidents, AIG’s policy considers almost everything that could possibly happen.

Through a partnership with Garde Robe, they’ll even kick in up to $25,000 for dry cleaning costs to move your designer wardrobe to help prevent loss from an impending threat.

designer closet

High fashion comes with a high premium

Coverage costs depends on a variety of factors. Risk to your wardrobe is a material consideration. For example, if your $1 million-dollar wardrobe is located in a non-flood zone or a frequently inhabited vacation home, you’re looking at around $3,000 per year. Wardrobes in higher risk areas will pay higher premiums.

The policy also includes diminished value coverage, which means the policy will pay to have an item fixed in addition to reimbursing the loss of value.

According to AIG, which sells its couture collection under the private collection policy, customers receive all the benefits from their private collections policy. If a moth eats its way through your garb, you are still covered for expense restoration and select reweave services; however, you will have a $500 deductible with a $5,000 per item limit.

And if you need to relocate your designer wardrobe to a high-end garment cleaner, many of which require cleaning before garments can be stored, damage must be at least $5,000 and also expose your wardrobe to possible loss.

Many wealth advisers consider high-net worth wardrobes an asset. If yours does as well, do yourself a favor and consider purchasing a couture collection policy. If you don’t, and your house gets hit by flood, earthquake or fire, hopefully you’ll be wearing your vintage Chanel suit.

Handbags need insurance coverage, too

What's a designer outfit without the appropriate handbag? Some credit cards offer specific coverage for your handbag and its contents, but you'll find those issued to mostly the well-heeled of France, Monaco and Andorra.

British-based Assetsure does offer handbag coverage, which can come in handy for the well-traveled. The company's policies are underwritten by Lloyd's of London and includes no limit for handbag coverage during overseas trips, new for old replacement, and insurance per bag or per collection.

"This is worth considering if you have a number of expensive handbags," James Farley, an insurance specialist with Assetsure, explains.

In the United States, handbags usually are covered on your homeowners policy. Again, you can go the rider-route if you just have one or two bags. It's important to remember, though, that coverage depends a lot on how your handbag went missing. If stolen or lost in a house fire, you're covered. Spilling wine or misplacing it isn't.

If you want expanded coverage, talk to an agent about extra coverage with a personal articles policy. These policies usually offer worldwide coverage for items not otherwise protected on your insurance policies, such as collectibles or fine arts. Often these policies will pay to replace the item without deductions or depreciation and apply to losses around the world.

So, when it comes to covering items not normally covered by insurance it pays to ask questions and look at your options.

"Every situation is different," Farley says.

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