Is It Best to Insure Your Hermès Bags at Purchase Price or Replacement Value?

Dear PurseBop;

I’ve recently become aware that the value of my handbag collection far exceeds what is covered under my homeowners insurance, so I’m starting the process of adding a “rider” to our policy. Do Hermes owners insure their bags at purchase price, or at replacement price? For me those are very different as I’ve bought my bags at boutiques.

Dear Unsure About Insurance:

When it comes to insuring high-value items like Hermès bags, the insurance coverage can vary based on the policy and the insurance provider. Typically, it’s recommended to insure such items at their replacement cost, which means the cost to replace the item with a similar one in the current market, rather than the purchase price.

Here are a few reasons why replacement cost is often recommended:

Value Appreciation: Luxury items like Hermès bags can appreciate in value over time due to factors such as rarity, demand, and condition. Insuring them at their purchase price might not cover their current market value.
Boutique Purchases: Since you bought your bags at boutiques, the purchase price might not accurately reflect their current market value. Replacement cost ensures that you can replace the items with a similar one at the current market price, particularly since that price may have increased since your purchase.
Coverage for Inflation: Over time, the cost of goods and services tends to increase due to inflation. Insuring your items at replacement cost accounts for the potential increase in prices over the years.
Availability: In the case of luxury items, especially those from limited editions or specific collections, it might be challenging to find an exact replacement at the original purchase price. However, the process is the same. Gather information on similar bags on the resale market and keep that information as well as the date gathered.

It’s important to discuss these factors with your insurance provider and specify that you want your Hermès bags insured at their replacement cost. Additionally, you might consider getting your bags appraised by a professional to determine their current market value accurately.

Keep all purchase receipts, appraisals, and any relevant documentation in a safe place, as these will be essential for the insurance claim process if you ever need to file one.

Good luck and happy shopping.