What is an Insurance “Floater”?

Do You Need a Policy to Insure Your Special ‘Floater’?

Are you a musician? Do you collect art? Is your jewelry of the diamond and pearl variety? If so, you might consider a floater policy to protect your prized electric guitar or great-grandmother’s earrings.

Often there are limits to your homeowners insurance policy that will make the coverage insufficient for these types of items. They are considered at high risk of theft or loss because they are easy to move or “float.” The solution is a floater policy or a rider added to your current coverage.

A floater policy or rider usually covers one specific item. Therefore, if you own several high-value items, you’ll need to add multiple riders so that you have sufficient coverage for all your valuables. The coverage is broader than the typical coverage provided by regular homeowners policies and includes accidental losses, accidental damage, and theft.

Of course, you will pay extra in premiums, but if you own something that falls into this floating category, you may be happy you spent those extra dollars. For example, if your musical instrument travels with you, the risk of damage or loss can be fairly high. Carrying a floater policy or rider will ensure protection of this prized possession.

You will most likely be required to have your item professionally appraised to obtain this coverage. Depending on the item, the appraisal cost can range from 20 dollars to several hundred.

With more than one item, this could get pricey, but if your rings slip off on your beach vacation, it could be well worth it.

Music Has Charms…But It Also May Make You Smarter

Whether music wakes you up or puts you to sleep, relaxes your muscles, or stimulates your senses – whatever its effect, it seems that music is good for you, and your brain. Or so researchers say.

While most see music as useful for stress relief or simply for enjoyment, according to University of Toronto psychology professor Glenn Schellenberg, it also achieves a great deal more. Schellenberg writes, “Music lessons in childhood…are associated with small but general and long-lasting intellectual benefits.” And these effects, he says, are not limited to musical ability but appear to improve one’s reasoning ability, language development, and spatial skills.

An article by Corrigall, Schellenberg, and Misura in Frontiers in Psychology explains: “Recent reviews confirm that in addition to being good listeners, musically trained individuals exhibit enhanced performance on tests of verbal abilities, including vocabulary, phonological awareness, reading, and spelling. Music training is also associated positively with performance on tests of spatial abilities and non-verbal reasoning.”

Citing several studies of music’s impact on the brain, the Fun Music Company concludes: “We often hear about an analytical person, like an accountant, being ‘left-brained’ while a more ‘free spirit,’ like an artist or poet, is considered ‘right-brained’…Music is one of the few activities that stimulates both sides of the brain.” And it appears that when the right and left hemispheres are stimulated at the same time, general cognition improves. Best of all, the kind of music you like isn’t important. As long as you enjoy it, apparently your IQ will too.

This Month’s Smile: Bloopers

We’re always amused by other peoples’ mistakes – especially public ones. Here are some great bloopers from blooper-prone sources.

These headlines are from The Media Online:

“Red Tape Holds Up New Bridges”

“Police Begin Campaign to Run Down Jaywalkers”

“Typhoon Rips Through Cemetery; Hundreds Dead”

Collected by teachers from students:

“Sewage is supplied by the city of Harrisburg, and is maintained by a maintenance crew.”

And the medical establishment:

“She slipped on the ice and apparently her legs went in separate directions in early December.”

Deciding between Replacement Cost and ACV

When choosing an insurance policy, it’s essential to understand the difference between replacement cost and actual cash value coverage.

If you ever need to file a claim, it will make a significant difference in your out-of-pocket expenses when you replace your damaged possessions.

The options

With a replacement cost policy, you’ll receive what it will cost to buy the equivalent item today. But with actual cash value coverage, you’ll receive the replacement cost less the decrease in value as the item ages (depreciation).

For example: Your dining set is destroyed in a fire. If you have replacement cost coverage, you will receive what it would cost to go to the furniture store today and buy a dining room set that is comparable in quality to the original. With actual cash value coverage, the insurer will consider the wear and tear of the dining room set and only pay you the depreciated amount. Because it was several years old, depreciation is taken into account. Although it may cost you more to purchase now than what it cost you originally, you’ll receive only the amount the old set was worth if you had sold it on the open market before it was destroyed.

The amount of depreciation is established by the insurance company based on a number of factors including what the item is, its original cost and its age, as well as the wear and tear experienced over the years as assessed by the insurer’s appraiser.

The cost benefit

While replacement cost policies on average cost 10%-15% more, in most cases they will be well worth the difference. The principle behind replacement cost is to allow you to avoid the costs of depreciation. Often replacement cost policies will offer higher limits for coverage. And if all of your belongings need to be replaced, this difference in reimbursement will quickly add up.

December 7th, 2015 by Lightship Insurance