SMSF trustees now have access to insurance cover specifically designed for personal use assets.
Self-managed superannuation fund (SMSF) insurance specialist Self Super Insurance has launched insurance cover for artwork and collectables to meet the needs of individuals who manage their own retirement savings.
The Stronger Super rules have dictated SMSFs must insure in the super fund’s name all collectable-type assets within seven days of their acquisition if the purchase was made on or after 1 July 2011.
If an SMSF has collectable assets purchased before 1 July 2011, it has until 1 July 2016 to abide by the new regulations.
Until now SMSF trustees had no specific cover to satisfy this requirement.
Furthermore, it would appear a large number of SMSFs would struggle to take out appropriate cover for collectables because of the low dollar amounts involved, according to Self Super Insurance managing director John Kelly.
“What I’ve found in the process of putting this together is insurance companies have quite happily looked at the larger collections of over $100,000 in value or a gallery which has multiple assets that are put together towards a larger limit, but no-one wants to insure stand-alone smaller value items,” Kelly told InvestorDaily.
“So we feel like we’ve completely satisfied a need in the market and we are able to satisfy the whole spectrum of these types of assets. I had someone the other day buy almost $500,000 worth of jewellery and they needed insurance, so we can cover the whole spectrum.”
SMSF trustees wanting to use the new Arts & Collectables insurance will have to have the assets valued themselves before applying for the cover, however, Self Super Insurance has an advisory panel that can help individuals with these valuations.
In setting up the cover, Kelly said he realised the less valuable a collectable asset was, the more the insurance cover for it would be, meaning the new rules might force people to revisit whether investing in personal assets was a cost-effective strategy.
Cover for commercial and residential property has also been introduced to the market again with specific SMSF elements incorporated in it.