What Personal Property Under a Homeowners Policy Is Subject to Limitations of Coverage?

“Hey, mister, throw me a doubloon!” When I was living just outside New Orleans in Waveland, Mississippi, thousands of other kids and I would yell those pleas to obtain utterly worthless doubloons during Mardi Gras. I am certain that our two Louisiana-based attorneys photographed above, Lucas Morehouse and Harrece Gassery, know those cries for doubloons every year when Mardi Gras comes around.

Are doubloons covered personal property if taken home and hoarded into a collection? Public adjuster Stephen Sarasohn and I have been having a private discussion about what constitutes personal property. I briefly researched case law and came across a Louisiana insurance case discussing whether unscheduled doubloons are personal property subject to a special limitation under a homeowners policy.1

The court, being in Louisiana, certainly knew Mardi Gras doubloons:

Mardi Gras souvenir doubloons are round objects, usually made of metal, which are given away by members of carnival organizations. Each organization has its own doubloons designed and produced annually. The vast majority of the doubloons are inexpensive souvenirs thrown by riders on parade floats to onlookers along the parade route; however, some doubloons with a substantial content of valuable metal are given away as favors at balls. No doubloons are offered by the organizations for public sale.

Many people locally began to collect the souvenirs, and doubloons are now bought, sold and traded through public and private channels. Doubloons, of course, have never been used as a medium of exchange.

Wikipedia notes that:

Mardi Gras doubloons were first created by New Orleans artist and entrepreneur H. Alvin Sharpe in 1959. Sharpe had his own metal dies for striking the doubloons from aluminum blanks. He presented a design to Darwin Schreiver Fenner, who was the captain of the Krewe of Rex, the leading Mardi Gras organization of the time. As a result of the presentation, Schreiver personally financed production of 3000 doubloons for the 1960 Mardi Gras year, although the Krewe of Rex produced 80,000 undated doubloons using Sharpe’s design, all minted by a firm in Ohio.

Sharpe’s design was larger but lighter than United States silver dollars, rendering them safe as Mardi Gras throws….The undated design was intentional so that the doubloons could be used as Mardi Gras throws in subsequent years.
…

Mardi Gras doubloons were common Mardi Gras throws by the late 1960s…Over the years of production, significant variety in shape and color came about. Some are made of materials other than aluminum. The common aluminum doubloon throws went through a period of significant over-production, which has limited their value. However, ones made of silver or cloisonné often have value in excess of the metal itself. (fn and citations omitted)

The issue presented to the court was:

Does a collection of Mardi Gras souvenir doubloons, stolen from plaintiff’s house, constitute numismatic property so as to fall within the $100.00 limitation contained in his homeowner’s insurance policy?

The policy provided:

This policy covers unscheduled personal property usual or incidental to the occupancy of the premises as a dwelling, owned, worn or used by an Insured, while in all situations anywhere in the world….

The policy also had a “Special Limits of Liability,” which provided:

2. Under Coverage C, this Company shall not be liable in any one loss with respect to the following named property:

(a)for more than $100 on money, bullion, numismatic property and bank notes;

(b) for more than $500 on accounts, bills, deeds, evidences of debt, letters of credit, notes other than bank notes; passports, railroad and other tickets, securities, and stamps including philatelic property;

(c) for more than $1000 on manuscripts;

(d) for more than $250 on articles of jewelry including watches, necklaces, bracelets, gems, precious and semi-precious stones and articles of gold or platinum and articles of fur or articles containing fur which represents their principal value

The insurance company refused to pay more than $100, arguing that special limitation 2(a) applied.

While the insurance company relied on Webster’s dictionary to prove that Mardi Gras doubloons were within the special limit, the policyholder engaged two numismatic experts and an English expert to support the conclusion that they were not within the special limitation.

The court found for the policyholder:

We conclude that doubloons are not included under the policy limitation on numismatic property. The unscheduled personal property coverage of homeowner’s insurance is designed to protect most property found in the home of the average person whose home is insured by the policy. Some items, such as automobiles, do not fall within the scope of this purpose and are specifically excluded. Other items, such as jewelry, are specially limited to an amount of coverage which fulfills the needs of the average homeowner. Thus, an insured who regularly keeps a large amount of jewelry in his home is notified by the limitation that additional coverage must be purchased to satisfy his special needs at his own cost, rather than at a cost to be distributed over the premiums of all insured homeowners.

We construe the $100.00 limitation clause as a whole as one which has intended to limit coverage on property which is money or a form of money. At best doubloons are medals which have no intrinsic monetary value and possess value only in relation to their desirability to collectors. In our opinion the policy limitation was not intended to apply to doubloon collections.

…

We hold that the policy language does not, either by the usual signification of the words or by the clear intent of the limiting clause as a whole, adequately inform an insured that the policy does not afford complete protection to a doubloon collection and that he must use scheduled coverage to secure this protection. Since the limitation does not apply, plaintiff is entitled to the full value of the doubloons.

Interestingly, a footnote in the opinion indicated that the policyholder did not get all that he was looking for:

“The trial judge classified several of the doubloons, which contained large quantities of valuable metals, as charms and then applied the $250.00 limitation on articles of jewelry to the loss of these particular doubloons valued at $300.00.

Inasmuch as plaintiff has not applied for an increase, we specifically decline to review the correctness of this $50.00 disallowance.”

A warning is to check your policy for sub-limits of expensive items, as discussed in Insurance Agents and Policyholders Need to Schedule Jewelry for Better Coverage, and Insuring Valuables And Collectibles.

Thought For The Day

In Brazil, you buy tickets to go to the stadium to watch the carnival, but in Trinidad, you buy a costume and take part. There are very few things that can rival that experience.
—Jillionaire
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1 Cotlar v. Gulf Ins. Co., 318 So.2d 923 (La. App. 1975).