Insuring Expensive Christmas Gifts
Insurance might be the least exciting thing about surprising your loved one with a valuable gift this holiday — but don’t let it fall off your priority list.
“Don’t sacrifice preparedness for the surprise,” says Lisa Lindsay, executive director at the Private Risk Management Association, an insurance industry group that focuses on high net worth customers.
You can insure some gifts by making a phone call to your agent or a specialty insurance company. Others, such as cars or vacations, require your loved one to buy a policy in his or her own name.
Whether it’ll hang on a wall or sit in a garage, here’s how to cover your big gift.
EXISTING INSURANCE MAY COVER THE GIFT
If you’re giving a pricey gift to someone who lives with you, the simplest way to insure it may be by expanding your homeowners or renters coverage. Standard policies pay out if belongings in your home are damaged or stolen, but coverage for valuables — such as furs, art and jewelry — is typically limited to $1,000 to $5,000. That’s after any deductible , which is the amount you pay before insurance pays a claim.
You can expand your current policy with a “scheduled” rider, floater or endorsement. Scheduling items onto your policy insures them based on cost or current value. For this reason, you’ll likely need a bill of sale or certified appraisal to cover the gift, says Steve Shiring, a vice president at Travelers Insurance .
But Shiring recommends talking to your insurer before you start shopping. An agent can help you choose between coverage options — for example, a scheduled rider versus stand-alone jewelry insurance for an engagement ring.
SPECIAL COVERAGE FOR ITEMS THAT GAIN VALUE
For gifts such as contemporary art or heirlooms that may appreciate in value, a rider that pays the increased value if the gift is damaged or stolen is a good investment.
To keep such a policy or rider in force, you might need an appraisal every one to three years. An insurance agent can help you find an appraiser, Shiring says.
WHEN A STANDALONE POLICY IS BETTER
Some insurers specialize in certain policies, covering only boats, electronics, or jewelry, for example. These companies may offer more policy options than large insurers — such as coverage for losing the gift — but you might miss the convenience and savings of bundling with one insurer.
There are several reasons you may want a stand-alone policy for a gift, rather than using home insurance:
¯ It’s for someone who doesn’t live with you, and you can’t add it to your home insurance
¯ You or the recipient don’t have homeowners or renters insurance
¯ It might be used for work, which would exclude it from many home policies
¯ A different type of policy is required for the gift, such as car or travel insurance
VEHICLES ARE A SPECIAL CASE
If your gift involves four wheels and a big red bow, the person driving it will need his or her own insurance — and you’ll need coverage to get it off the lot.
If you share an auto insurance policy with the gift recipient, it’s relatively simple: Add the car to your shared policy and transfer the title after the surprise.
But if you bought a vehicle for someone who doesn’t live with you, he or she will have to insure it independently. In this situation, consider surprising your loved one at the dealership so the car is properly titled and insured from the start, Lindsay says.
TAKE PRECAUTIONS FOR TRAVEL OR SHIPPING
The last thing you want is for your expensive gift to be lost or stolen before the recipient sees it, and the chances of this are higher if it needs to travel. “Never pack expensive items in your checked luggage,” Lindsay says.
If you’re ordering something expensive online, make sure it won’t sit on a front porch unattended. “Porch theft is a hot new cottage industry,” says Bob Courtemanche, a senior director at Risk Strategies Company, a national insurance brokerage firm. Courtemanche recommends using a shipping method that requires a signature upon delivery.
When shipping fine art, use a professional shipper and packer so it’s not damaged before it arrives, and make sure the shipper has insurance. Damage in transit is the leading cause of fine art claims, Courtemanche says.