The holiday season is upon us, which means it’s time for family, friends, good food, magic feelings, and lots of gift giving. The only thing better than getting a holiday present is giving one to someone you love.
But amongst the excitement and joy of the holiday season lurks negligence that can cost you your new presents. Forgetting to insure your new purchases could mean a significant financial loss if something were to go wrong.
Why do you need insurance for new gifts?
Our recipe for financial disaster has two ingredients: new, uninsured gifts and higher risks of theft.
96 million households don’t understand or are unaware of the key aspects of insurance when it comes to high-ticket items, according to a national survey by Trusted Choice and Independent Insurance Agents & Brokers of America. But half of those 96 million expect to give or receive high-ticket items during the holiday season.
This means there are millions of families putting their new presents at risk simply by not being aware of the basics of insuring their large purchases.
Most people incorrectly assume that any items they own are automatically accounted for in their homeowners or renters policy. But if an item is not explicitly listed on your homeowners’ inventory contents, your insurance policy likely will not cover it. Furthermore, there are a number of large gift items that based on the nature of the item, could have a caps or limit on the insurance coverage your homeowners insurance would provide. Things like jewelry, antiques, luxury items and collectibles would fall into this category.
In addition, there are increased risks during the holiday season that call for insurance coverage. The highest number of thefts occurs on Black Friday, and thieves use the hectic partying and vacation time of the holidays to slip into your home and clean you out.
So how can you protect from damaged, stolen, or lost high-ticket gifts? Prep yourself with adequate insurance.
What gifts need insurance?
Any gifts or purchases with a high value attached need insurance. If that expensive item were damaged, lost, or stolen—how much would it cost to replace it? If the cost to replace the item would further impact your wallet, it’s worth getting insurance.
When looking for coverage for new purchases or gifts, there are two key considerations: the type of item and the cost.
Property Protection
Certain items are placed in “capped” categories. This means they might already be covered in your homeowners’ policy up to a certain limit. These items can include:
- Art
- Cameras and equipment
- Collections
- Firearms
- Furs
- Jewelry/watches
- Instruments
- Rare Books
These caps can also be considered “special limitations.” This affects the insured value of certain gift items, like computer software, business equipment, large sums of money, and more.
Some high-ticket gift items are not capped—like furniture or stereo equipment—but may not be included in your deductible.
Liability Protection
Note that some gifts may also have “liability limits.” For example, expensive drones may need to be covered under property protection… but they also are a liability that should be insured for. A second example would be trampolines, where additional liability limits should be considered. Anything that could potentially hurt a third party needs an additional line of liability insurance.
How do you insure your gifts?
Homeowners’ coverage usually will not cover any items that are not on your home contents list. If your home policy does protect your new gifts, it’s likely that the capped limit is so low that it wouldn’t even cover a fraction of the value of the present.
For example, jewelry is averagely capped at $1,500—no matter the value of that jewelry item. You’ll want to consider the value of your new gift in order to ensure you are fully protected. There are four ways you can go about covering your gifts if they’re worth more than your homeowners’ insurance cap.
1. Get a blanket rider.
You can boost your coverage for all of your gifts (and possessions) with a rider. A rider is an add-on to your policy that will generally provide extra “blanket” coverage for your valuable items. This is useful if you want to insure multiple moderately-priced gifts without raising your premium too much.
2. Schedule your items.
A scheduled item is a rider on your homeowners or renters policy that is specifically for one item. You will get that gift appraised, and you are then covered for that appraised, set value. This is best if you have given or received a gift that is high-value and needs its own line of coverage, such as luxury jewelry or the iPhone X.
You can also choose to insure this item without a deductible; this means that if something happens to it, you don’t have to pay anything out of pocket. This likely will make your premium for this rider slightly higher, but it could work in your favor in the case of a claim.
3. Consider standalone coverage.
If you don’t have a homeowners or renters policy (like if you are a student or live at home), you can consider purchasing a separate policy to insure a specific gift. This can cover the item on another plan or give you a separate, small line of coverage. 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.
4. Change your policy.
Although more work and effort, you can consider switching policies all together. You can look for a homeowners policy with a higher limit of insurance, like comprehensive plans, or one with a greater scope of coverage, like umbrella liability. This is usually only recommended if you are already in the process of changing your insurance.
Note: Talk to an insurance agent about the possibilities of waiving deductibles for specific item coverage. This means you wouldn’t have to pay out of pocket in the case of a claim for that item.
Tips For Insuring Holiday Gifts
1. Talk to an agent as soon as you buy or receive an expensive gift. You could be walking out of the store with a $15,000 necklace when a thief swoops in and takes it. Get insurance as soon as possible.
2. Get an appraisal quickly. If your gift will be covered as a scheduled item, you’ll need to get it appraised. Do this sooner rather than later to ensure you get the full value at the time of purchase or receiving. Even waiting a few months might change the appraised value.
3. Get shipping insurance. If you’re mailing any sort of gift, homeowners insurance may not cover those items while in transit. Items can get damaged on the truck or stolen from a front porch. Choose shipping insurance to safeguard from transportation hazards.
4. Remind your friends. Share this article with your friends and the recipients of your gifts to remind them to get gift coverage. You don’t want to give your loved ones an expensive gift only for something to happen to it and they’re not covered to replace it.
The Bottom Line
Insuring high-ticket holiday gifts usually only adds a few extra dollars to your premium each month. The peace of mind that comes with complete insurance coverage will then allow you to enjoy the magic of the season.
Contact an InsuraMatch agent today to protect your new gadgets and toys this holiday season. Happy holidays starts with happy coverage!