Most homeowners insurance policies will cover personal items such as appliances, furniture and clothing in the event of theft or loss, but the standard homeowners policy offers only limited coverage for highly valuable items. This is where supplementing a standard homeowners policy with a personal article floater or endorsement policy can provide essential coverage. 

“A regular homeowners policy limits how much it will pay for certain classes of valuable items, such as jewelry, artwork and furs," says Paul Gallagher, senior vice president, NFP. Agents need to explain that “if you don't schedule your valuable pieces, you're not going to have enough money to replace those items. A personal floater policy or endorsement allows you to bypass that sublimit," Gallagher says.

By partnering with carriers that specialize in the high net-worth niche market, independent agents can shine. “This is a perfect example of a place where an independent agent adds a ton of value because they're working with multiple carriers," says Mike Grove, senior vice president, head of global retail markets U.S. product state management, Liberty Mutual. “If you've got a client who has millions of dollars of jewelry, there are companies that focus on that."

Here are three ways a personal floater can provide coverage for your clients' high-value items, unique or hard-to-find items, or items that change physical locations frequently:

1) Insures individual items to a specified value. “The personal article floater gives you an opportunity to specifically identify what things you're going to cover and allows you to set the value on a piece of property," says Bill Martin, president and CEO, Plymouth Rock Home Assurance. “You can imagine two arguments with your insurer once a claim happens: whether a piece of jewelry ever existed, or what the value of that jewelry is. A personal article floater completely eliminates those arguments."

However, before purchasing a floater, items must be professionally appraised. “You have to go through this extra process to be sure you're not overvaluing your property, creating a fraud risk," Martin says. “It's a lot of upfront work for a lot of savings later."

“Frankly, if the value of the property is more than what would normally be covered under the insurance policy, the endorsement will cost you a little more, but this cost is relatively tiny compared to the loss of the article itself," Martin says.

2) Does not require a deductible. Floater policies eliminate the deductible, which means the client has “first-dollar coverage" and has loss settlement options, such as replacement cost coverage or agreed value coverage.

In addition, “a lot of carriers treat claims on scheduled property differently from, for example, a theft or a fire claim," Grove says. “Your rate won't be penalized as much for a scheduled jewelry loss, and this is a benefit and difference than if you file a claim that's not scheduled."

3) Offers a broader list of covered perils. Personal article floater policies also offer a much broader list of covered perils. In general, they “provide broader coverage than you would have under your homeowners policy," Gallagher says. “An example of broader coverage includes damage caused by flood, which is not covered under a homeowners policy but covered by most floaters. However, if you don't schedule it, it's not covered for flood."

To sell this type of coverage, agents must ask their clients if they own any valuable items that are worth more or would account for a majority of the personal property limits in advance of issuing any policy documents. “While the customer might not come back right away and give you an answer, because they just need the insurance to move on, agents should ask it again," says Martin. “That the customer might think of that $7,000 TV they bought and realize, 'I should probably list that.'"

Ultimately, the customers who have personal floater coverage know exactly why they have purchased the coverage. “For agents, it's an opportunity not only to make more money but also to create more comfort for people," Martin says.

Olivia Overman is IA content editor.