Is your wine covered?

If you have a modest wine collection, which is not too expensive and primarily for consumption, it will likely be covered through your homeowners policy. Check with your agent to make sure you have ample insurance and that your wine stash is included. Here is an easy test: If you store your wine in the refrigerator beside your Budweiser, then you are probably all set.

For serious wine enthusiasts, however, the limits on your homeowners policy may not be sufficient in the event of a loss. Coverage is available for wine connoisseurs from Chubb(NYSE:CB), AXA(NYSE:AXA), or other smaller specialty carriers.

The cost is relatively inexpensive -- usually no more than $0.50 per $100 of the collection's value. This is significantly lower than coverage for jewelry, furs, or firearms. "All Risk" coverage is available, which gives you protection against a broad range of losses including fire, theft, or breakage.

Insuring wine is an easy process. No appraisals are necessary unless you have individual bottles that are worth more than $10,000. All that is required is the actual number of bottles and their aggregate value. Remember that vintages tend to appreciate in value as they age, so it is critical to use the market price -- not purchase price -- because insurance companies will cover replacement cost. As with any claim, insurance companies require a current and accurate inventory.

A valuable wine collection could lead to probate snafus, so make sure your estate planning references your wine. Some people have unique ways of dealing with inheritance issues. When asked what she would do with their rare wine assemblage if her husband met an untimely death, a client of ours remarked, "Hmm ... drink it with my next husband, I guess."

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By Buz Livingston, CFP

Fool contributor Buz Livingston, CFP, owns no stocks mentioned in this article. He is also out of beer and wine.

© 2006 MSNBC.com