Here’s How To Insure Your Gold Coins (Hint: Don’t Use Your Home Owners Insurance Policy)

If you own a decent quantity of gold bullion, it’s a good idea to get it insured regardless of how safe you think you’ve stored it.  Even with a safe deposit box at your local bank– if you have enough of it, you’ll definitely want to insure it.

And if you really have a lot of gold, it would be prudent to split it up between two different safe deposit boxes.

Am I worried about the government confiscating gold? I don’t find it to be any more likely than the government confiscating anything else, and I think there’s a much higher probability that the government would take real property or just raise taxes before exposing it self to the hornets nest that confiscating private property– especially precious metals– would create.

Sure, it could happen again.  And a giant meteor could crash into Los Angeles causing a massive death cloud of dust that blocks out the sun.  But I’m not too worried about either of those scenarios, personally.

But if I had a lot of gold coins stuffed into a safe deposit box, I’d be worried– despite the low probability– of the gold being stolen.  Stranger things have happened.  Unfortunately, calling up the guy who sold you a home insurance policy is not going to get you what you’re looking for as their rates will typically run and insane 2-3% per year.

There was an excellent thread over on Craig Rowland’s Permanent Portfolio discussion forum on insuring gold with Hugh Woods.  I encourage you to read through the entire thread yourself (and check out Rowland and Lawson’s excellent book on the Permanent Portfolio as well as Harry Browne’s Fail Safe Investing if you’d like more information on the Permanent Portfolio approach to investing.  I use it myself and feel it is the best all-around investing approach to dealing with a Black Swan event while still beating inflation and matching the S&P!).  Here are a few select quotes from that thread:

Going through a speciality insurer (like Hugh Wood) seems to be the way to go. I should have known that my homeowners plan wasn’t going to cut it when I had to explain to my insurance agent how one values a non-numismatic gold coin! I’ll report back if I make progress.

I received my quote from Hugh Wood. They are quoting an annual premium of 0.31% of the total value of the bullion coin collection while in my safe deposit box, and a $250 deductible. I can change the value of the coverage as the price of gold fluctuates. Raising the deductible significantly did not improve the premium very much. Overall, it’s far better than getting a rider on my home insurance, and it was nice to have an agent that understood how bullion actually worked.

The coverage is offered through “XL Speciality Insurance Company.” I am told they have a very good reputation, and an “A” rating from Standard and Poor’s and A.M. Best. Though, I must admit that I have never heard of them. The price is what I was expecting, and it’s comparable to a typical expense ratio. Seems worth it to me for peace of mind.

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