Insuring Your Cigar Collection

The Truth? You Should Insure Your High-Value Cigar Collection

You’ve probably heard the story about the lawyer who insured his cigar collection. According to the tale, he then filed a claim with his carrier because the cigars had all been destroyed by separate fires. A judge, upon hearing the case, ruled that fire was a covered peril in the policy and ordered the carrier to pay up. The kicker: When the lawyer accepted payment for the claim, he was promptly arrested for arson because he had “set the fires” himself when he smoked them.

Great story, right? Problem is, it’s a hoax.

So is there a connection between your cigar collection and your home insurance? The answer to that question is a resounding “yes.” In fact, there could be more than one.

First the bad news

One way your cigar collection might affect your home insurance policy is a definite negative. Unless you don’t actually smoke the cigars, you’ll lose access to a major home insurance discount available in some states. It’s called the nonsmokers discount, and it can save you up to 20% on your premium. It’s restricted to households in which no members smoke cigarettes or other tobacco products, and it’s in place because it lessens the chance of fire.

Now the good news

The good news is that your cigar collection is covered against fire, wind and other perils specified in your homeowners policy. The collection falls under your personal property coverage, which gives you help if the contents of your home are damaged by a covered peril. Coverage limits for your stuff generally are set as a percentage of the amount of dwelling coverage for your home. That’s the amount it would take to rebuild your home in case it is damaged by a covered event. Standard home insurance policies generally set personal property coverage limits at 50% to 70% of the amount of your dwelling coverage.

Make sure you have enough coverage

However, there can be a catch as your policy relates to your cigar collection. High-value items, including jewelry, furs and collectibles, are only insured up to a specified amount. If you just have a random selection of cigars you picked up at the corner shop, you’re probably in good shape. But if your collection includes a box of Gurkha’s original Black Dragon cigars, which sells for $115,000, or even a large number of Hoyo de Monterrey Double Coronas – at $32 a cigar – you could exceed the limit fairly quickly. The solution is to schedule an endorsement. That’s extra coverage for your high value items.

Regardless of whether you take the endorsement route or you’re comfortable with the limit as it is, you’ll need to list what’s in your collection on a home inventory. That’s a glorified listing, with receipts and photos when possible, of everything you have in the home. It will help you get your claim paid quicker. Keep several copies of the inventory, and make sure you have at least one offsite in case your home is damaged.

Make sure you have the right coverage

There is one other potential problem as well. Standard home insurance policies typically don’t cover damage from floods. You’ll need a separate policy for that. If you survived Superstorm Sandy, for example, but your cigar collection didn’t, you’d only received help for your smokes if you had flood insurance. Premiums vary according to the potential risk, but if you live in a lower risk area, you could pay less than $150 for coverage.

Is flood insurance right for your collection? Consider that it would also cover the rest of your home as well. If your collection means a lot to you, you might want to click here to find a licensed agent about how much protection you have for it and how much you need.