Dear Lee,

Two serious problems for collectors are being discussed in the news these days. Finding the right insurance coverage for collections has always presented a problem, but now it is not just the contents of a house but the house itself that may cause very high insurance premiums, according to USA Today. The average increase in homeowner policy premiums was predicted to be about 6% or higher this year. Rates in some states are up over 200% because of natural disasters or a surge in claims. Insurance is regulated by each state. Find out the rules in your state. Some states say insurers can’t arbitrarily cancel a policy; some say they can’t cancel unless there are three non-weather related claims in three years. Insurance companies check CLUE (Comprehensive Loss Underwriting Exchange) reports before issuing new policies. A CLUE report is based on the claims data of about 90% of American insurers, and lists insurance claims previously filed on property. Too many claims within the past five years, including claims for theft or water damage, could mean you or the new owner of the house will be denied insurance. You can get a copy of the CLUE report on your own property by calling 866-527-2600. The cost is $8. If you are buying a house, ask the seller to order a copy for you. If your insurance does go up, be sure to check other companies for a better rate. It may be a good idea to consider raising your deductible. And check your credit report, because that too is considered by insurers.

The second problem was highlighted by the indictment of a wealthy CEO for evading sales tax. He had purchased expensive paintings in New York, sent empty boxes to another state, then claimed the paintings were to be used out of state-making them exempt from state sales tax. The CEO, if convicted on all counts, could get over 40 years in prison. A sentence that long is probably unlikely, even though the state sales tax he allegedly tried to avoid totaled $1 million. Have you ever claimed to be a dealer so you didn’t have to pay state sales tax at a flea market or shop? Not only is it illegal, but it also might lead to an investigation, fines, or worse if you are in a state that checks up on these transactions. Honesty is still the best policy.