Dolce and Gabbana. Oscar de la Renta. Hermès. Marc Jacobs. Chanel. If these kinds of lavish designer labels grace your walk-in closet, you’re probably a serious fashionista – and you also need to call your insurance agent, stat.
Why? Because if your house burns to the ground, gets swept away by a flood or is raided by fashion-obsessed robbers, simple homeowners insurance will not protect your big-ticket garments and elegant accessories. If you want to cover your couture collection, you’re going to need specialized designer wardrobe insurance.
Unlike other collectible items such as art, jewelry and antiques, insurance companies typically lump clothing, shoes and handbags into the “household contents” category (see How To Insure Non-Traditional Assets and A Quick Guide on How to Insure Jewelry). These items are subject to high deductibles and a myriad of limits and exclusions, such as floods, moth damage and mold.
Furs, of course, can (and often are) be itemized on a policy rider. But if you’re a designer-clothing aficionado, you are well aware that even a simple sundress can run you as much as a fun fur – several thousand dollars. And let’s not even talk about the haute couture ensemble you bought for last year’s charity gala (it would be gauche, after all, to point out that it cost you six figures). In other words, if your closet is bursting at the seams with designer clothes, handbags, shoes and furs, the “contents” of that walk-in could easily add up to more than a million dollars. Of course, that’s assuming you have only one designer-decked closet. Throw in the vacation home and the pied-à-terre, and you might be pushing $1.5 million.
So, how do you protect your expansive and expensive wardrobe? Fortunately, there’s a new insurance product for that.
Avoid a Fashion Wipeout
In September 2015, AIG Private Client Group (a division of American International Group, Inc. (AIG) that serves high net worth policyholders) released what they call “wearable collections coverage.” This specialized insurance solution is designed to protect couture and designer garb – which, as described above, is not included in most homeowners insurance policies. The new policy is currently available in New York and Texas, and should be available in additional states by the end of the year.
“Much like collectors of fine art, vintage cars, or wine, customers who invest in their wardrobes can be quite passionate about their acquisitions,” said Ron Fiamma, vice president and global head of private collections for AIG Private Client Group, in a news release. “To help safeguard these items, our new couture solution closes the gaps in a traditional homeowners policy and enables us to proactively mitigate risks for these collections.”
AIG worked with Garde Robe Online, LLC, an apparel storage and preservation service, to identify coverage features and develop a comprehensive insurance solution for designer wardrobe collectors. In fact, the product was the brainchild of Doug Greenberg, an owner of Garde Robe Online. When he noticed most of his Garde Robe’s clients declined the firm’s proffered insurance on clothes stored in its facilities, he approached insurance underwriters and suggested the product.
As AIG developed the policy, they sent underwriters to designers’ studios to learn about the materials and workmanship involved in fashion and interviewed Garde Robe’s clients. The end result was a unique insurance solution that recognizes the value placed on the skilled workmanship and fine detail of high-end designer fashions and accessories, many of which might be one-of-a-kind or custom-made.
AIG’s wearable collections insurance covers both couture (also known as made-to-measure) and ready-to-wear garments as well as vintage garments, shoes, handbags and other accessories. The policy covers any designer apparel damage caused by floods; earthquakes; mold, moths and other vermin; and accidents – risks that are often excluded from traditional homeowners policies. If a designer piece is damaged by a covered loss, the insurance also pays for dry cleaning and restoration costs by a high-end garment care specialist.
Additionally, the insurance includes coverage for custom, work-in-progress couture and shoes. It also reimburses you for expenses if you decide to remove your designer wardrobe from your home in advance of an impending threat. Better yet, your clothing is covered across the globe, even when it’s in transit. That means you won’t have to sweat it when you check your couture-stuffed Louis Vuitton leather suitcase with a commercial airline (see Private Jet Charter vs. First Class: What's Best?).
AIG’s couture insurance will pay for the repair or replacement of garments, whenever possible. The policy includes a loss-in-value clause, which means if a client’s collection of vintage Chanel suits is damaged in an earthquake, she can be compensated for the reduced value as well as for any repairs.
To top it off, AIG Private Client Group’s in-house collection management specialists are available to customers year-round to help preserve the long-term value of collectible garments, shoes and handbags. The policy includes an array of services, including vulnerability assessments, emergency planning and referrals to wardrobe-preservation specialists.
How Much Does it Cost?
If you have a designer wardrobe valued at $1 million, it would cost approximately $3,000 a year to insure your collection through AIG’s couture insurance (depending on the potential risks to the clothes). These premiums vary based on the location of your clothing collection. For example, if your wardrobe is located in a flood zone, hurricane-prone area or in a rarely used vacation home, coverage will probably cost you more.
The AIG policy offers incentives to clients who use professional storage services where garments are covered in breathable garment bags and held in climate-controlled spaces. AIG’s couture coverage is sold under the insurer’s private collections policy, which includes benefits like agreed-value coverage, no deductibles and loss-in-value payments.
The Bottom Line
AIG estimates that high net worth individuals in the U.S. pay about $5 billion in annual insurance premiums, but only 20% of them are adequately insured. If you own an extensive collection of couture, it’s time to look into designer wardrobe insurance. Remember, your homeowners insurance most likely does not cover your high-value garments. Without the proper coverage, one burst pipe or hungry moth family could cost you thousands or even millions of dollars. Not to mention leaving you with absolutely nothing to wear.