Due to its organic nature, wine can deteriorate and turn sour. And if a bottle shatters on the floor, hundreds or thousands of dollars could be reduced to a puddle.
A standard homeowners insurance policy doesn’t completely protect the investment of a wine collection.
“It may offer coverage for theft, fire or if wine bottles break, depending on the cause of the breakage, but a home policy does not cover a loss caused by extreme temperatures, dampness and dryness or losses that are the result of a power outage,” says Jennifer Foley, account manager at Assurance Agency, an insurance brokerage group in Chicago.
Wondering if your wine is adequately insured? The answer depends on how much financial risk you’re willing to take.
If you have $3,000–$5,000 in wine, but only want to be on the hook for up to $1,000 should your collection be harmed, you need specific coverage. Wine in “high-risk zones” like an earthquake or flood area, an area prone to extreme temperatures or bottles stored in warehouses or other storage facilities should also be insured.
Coverage is relatively affordable. While rates vary by insurer, on average you’ll spend 50 cents per $100 of coverage. A wine collection insured at $250,000 would cost roughly $1,250 a year to insure. Policies generally don’t have a deductible, says Foley.
It’s a small price to pay to protect those precious bottles.
Tips for Insuring Your Wine
1. Ring your agent. “The first step [to insuring your wine] is to talk with your insurance agent and learn about the different types of coverage available,” says Foley. If your agent doesn’t offer wine insurance, seek out an independent agent with expertise in wine-collection coverage.
2. Ask detailed questions. The number one mistake made when purchasing wine insurance is not asking about the extent of the coverage. “If you have several thousand dollars of wine in storage, you want to make sure your policy provides coverage on a worldwide basis, including warehouses and storage facilities as well as wine in your home,” says Ray Condon, president of Aon Risk Solutions, a private risk-management practice.
Condon also suggests asking if wine in transit is covered to protect future bottles you may have shipped to you and if there is label-damage or bottle-breakage coverage. “Think of the entire bottle, not just the contents,” he says.
3. Get an appraisal. To know how much coverage is necessary, you need to know what your wine collection is worth. Get a wine-appraisal specialist to get you an estimate before selecting a policy plan.
4. Create an inventory. An accurate inventory with an up-to-date value helps you and your agent understand your insurance needs and helps you manage your collection in the event that bottles get damaged. “People often learn that they were un- or underinsured the hard way, after their wine has been destroyed by a fire, flood, theft, breakage, etc.” says Condon.
5. Evaluate your storage space. You may require additional coverage to insure the storage area. Talk to your agent about the specialized environmental control system you installed, or other elements you’ve added to your home to protect and store your wine. Foley says that a homeowner insurance policy may need to be reviewed and revised to properly cover these investments.
6. Shop around. Before you sign on a policy’s dotted line, Condon suggests shopping around to make sure you’re getting the best coverage for the best price. Get three quotes before deciding.
7. Keep your inventory up to date. When you buy, sell, trade or drink a bottle from your collection, keep in mind that your insurance will need to be adjusted accordingly. Periodic reviews are essential. “The exact timing of the review depends on the amount of activity in your collection, but let your agent know whenever there’s been a significant change in the value of your collection,” says Foley.