What Is Valuable Papers Insurance?

Valuable papers insurance is a special type of property-casualty insurance. Valuable papers insurance reimburses the policyholder for the monetary value of any valuable papers such as wills, trusts, or corporate charters that are lost for any reason, though it cannot actually replace these papers. It is often purchased by corporations, small businesses, and wealthy people.

Key Takeaways

  • Valuable papers insurance reimburses the policyholder for the monetary value of any valuable papers such as wills, trusts, or corporate charters that are lost for any reason, though it cannot actually replace these papers.
  • Valuable papers insurance coverage is always limited to either the actual monetary value of the papers themselves or their replacement value, with the stipulation that the papers insured must always be carefully guarded in order to file a claim.
  • Valuable papers insurance usually exclude documents stored electronically.

Understanding Valuable Papers Insurance

Valuable papers insurance protects businesses from the expensive and often time-consuming process of replacing important documents. The coverage limits for valuable papers insurance can be very high in some cases. However, the coverage is always limited to either the actual monetary value of the papers themselves or their replacement value. Furthermore, the papers insured must always be carefully guarded in order to file a claim.

For example, let's say a company's headquarters is destroyed in a flood. The company's share certificates, documents related to a court case the company was once involved in, as well as information related to personnel and other important papers were all destroyed in the flood. This company has valuable papers insurance, so it files a claim and is reimbursed for these documents, thus saving the company money as well as time and effort involved in reconstructing the evidence from the court case. Medical and legal records are often the toughest to reproduce, as well as documents related to research and development.

If a business' commercial property policy does not include valuable papers, those items can be insured by an endorsement, which generally provides the same, or in some cases broader, coverage than is included in a typical property-casualty insurance policy.

What Isn't Covered

Most insurance policies for valuable papers specifically state the exclusion of documents stored electronically. Even though many businesses keep a wealth of important records in electronic form, few property policies provide coverage for damage to electronic data. However, businesses can protect this information with coverage specifically for electronic documents.

Even though most businesses today store a great deal of information electronically, original documents are still important. Valuable papers insurance can help compensate companies for the time spent reproducing lost documents, but it cannot replace those documents. Often, critical documents can't be replaced at all.

Valuable papers insurance is used mostly by businesses, but individuals can also acquire coverage. Insurers often require the policyholder to make efforts to protect valuable papers by putting them in a safe, for example, to receive compensation if they are destroyed.