Insuring Your Expensive Holiday Gifts This Season
Learn Which Items Homeowners Insurance Might Not Cover
During the holidays, many people receive big-ticket items like expensive jewelry, laptops, or other valuables as gifts. When unwrapping this special present, losing or insuring it is probably not the first thing on your mind.
It’s good to note that most homeowners insurance policies do not cover all your valuables automatically, especially not for the full replacement value. Some insurance policies have special limits for different kinds of specialty items that cap at a certain amount and do not include mysterious disappearance. You might be surprised as well as disappointed to find out how quickly your belongings can add up to exceed these limits.
“Inland Marine coverage protects high-priced items, from laptops to photography equipment, that other policies may leave out,” said Dan Thompson, Raleigh insurance agent and founder of Dan Thompson Agency. “It also includes mysterious disappearance which covers an event like a ring is still on your finger, but the diamond is missing. Maybe the diamond is lost in your garden. You don’t really know but you can protect against that.”
Inland Marine coverage carries its own deductible. You can choose your deductible amount or pay slightly more to not have one at all, depending on the options. An appraisal is needed and kept on file in case there is a loss.
“You could also have a situation where a guitar worth thousands of dollars doesn’t get off the plane when you do,” Thompson added. “Mysterious disappearance is actually fairly common. Make sure whatever coverage you choose protects against those moments when you can’t find your jewelry or other precious item.”
What is covered by homeowners or renters insurance?
Many people incorrectly assume that any items they own are automatically covered in their homeowners or renters policy. But if an item is not explicitly listed on your homeowners’ inventory contents, your insurance will most likely not cover it.
If you have a fire, a flood, theft or other event that is covered by your insurance, then your possessions will be protected for as much as your policy allows. There is almost always a limit on the amount you can receive for certain property, so you may need to add more coverage.
Capped items can fall into one or more of these categories:
- Art
- Firearms
- Instruments
- Jewelry
- Sporting gear
- Watches
- Unique luxury items
“If you’re planning on gifting something like a $10,000 piece of jewelry, you really need to talk to an agent as soon as you buy or receive it and get that extra insurance,” Dan Thompson said. “Extra coverage is not even that expensive and could save you thousands in the long run. You should typically budget $10 per thousand on a schedule for a valuable gift.”
Keep a record of your valuable items
Not insuring your new purchases could mean a significant financial loss down the road if something were to go wrong. It’s best to purchase extra coverage to make sure you have the protection you need against damaged, stolen, or lost big-ticket gifts.
First you need to keep a record of your new items and possibly get it appraised if required by your insurance. Here are some ways to keep track of your item’s value:
- Take a photo. Having a picture of valuable items can help with any claims later in the event the item is lost or stolen.
- Keep the receipt! Make sure to keep that receipt in a place you will remember should it ever be needed. This will provide proof of the cost of your item at the time of purchase.
- Get it appraised. This may or may not be required, but it can help determine the actual value if it’s a specialty item or antique jewelry.
“I have one client who takes a $15,000 antique gun to Mexico and hunts ducks, so I told him to get it appraised,” said Dan Thompson. “This way he is covered with an appraisal on file, so he gets full value and not a depreciated amount if the gun is lost or stolen while it’s mobile.”
“Same thing for a diamond,” he added. “Without an appraisal on your diamond, some insurance companies have the right to replace your item with ‘like kind and quality’ which may not be what you were expecting.”
What’s the best insurance to have?
There are many ways to protect your gifts and yourself this season. One way is to consider purchasing a separate policy to insure a specific gift. For example, if you are a student and get a new laptop for Christmas, you could buy a standalone policy that specifically covers that laptop from theft or damage.
You could also get a blanket rider, which is an add-on to your regular policy that can provide extra coverage for your more valuable items. This is a good option if you have more moderately-priced presents since it will not raise your premium very much.
If you have one very expensive gift you need to protect, consider scheduling that item. A scheduled item is a rider on your homeowners or renters policy that is specifically for one item. You would need to get that gift appraised and then you’d be covered for that appraised, set value. This is the best option if you have given or received a gift such as luxury jewelry or something of equally high value. Scheduled personal property insurance gives you coverage that helps protect the financial value of your gift.
“When things become mobile, such as firearms and camera equipment, those things need to be scheduled,” said Dan Thompson.
You’ll also need to consider whether your insurance covers the replacement cost or the actual cash value of your property. The difference in what you’ll get back can be dramatic if the item is considered to be something that has depreciated.
“I’ve seen someone lose a new Rolex watch that was thrown out with Christmas packaging, this kind of thing happens more than you realize,” Dan Thompson said. “Call us so you understand the limitations and exclusions in your home insurance policy and we will find the best way to protect your new possessions.”
While you may need additional coverage to properly insure certain valuables, know that insuring high-ticket holiday gifts usually only adds a few extra dollars to your premium each month. The peace of mind that comes with the right insurance coverage can allow you to enjoy the season even more!