Are you planning to blow it out on an expensive gift for a loved one this Christmas? If so, you should think about protecting it.
Gifting a flashy watch, diamond necklace, or a vintage car is a surefire way to create an unforgettable holiday season for a partner, child, or close family member. However, that wonderful feeling can quickly turn sour should those gorgeous earrings go missing or that magnificent piece of art gets stolen.
Give yourself, as well as the gift recipient, peace of mind by insuring your holiday gifts. You’ll avoid any heartbreak and can rest assured that your loved one will enjoy their impressive present for years to come. So, what are the coverage options available for valuable gifts?
Increasing your home insurance
Suppose you’re buying an expensive holiday gift for someone you live with. In that case, chances are you’ll be able to include it on your current homeowner or rental insurance policy. However, the worst mistake you can make is to assume that it will automatically be covered.
Insurance coverage often caps between $1,000 and $5,000 for valuable items, including jewelry and artwork. Therefore, if you already have valuable items of that kind or the gift is particularly pricey, your policy may not cover it. Therefore, be sure to check what the current coverage on your home insurance policy is and see if additional insurance is needed.
Understand your coverage options
Another thing to note about home insurance for valuable items is that they often determine payouts on fair market value, known as
actual cash value coverage. This means that in the case of theft, you’ll receive the replacement cost minus depreciation. For particular items like electronics, this usually results in a considerably lower payout than what you paid as these types of things rapidly depreciate.
So instead, opt for replacement cost coverage. Although this insurance policy is more expensive than actual cash value coverage, the payout you receive will equate to the current-day purchase cost.
Get the item appraised
Insuring expensive jewelry works a bit differently, so if you’re purchasing this type of gift, be sure to get it appraised. An appraisal will help determine the value of the jewelry and help you understand the amount of coverage you need. With this, you can then purchase a floater or rider from your insurance agent.
You should also get any expensive artwork appraised. Plus, as an additional safety step, take photographs to document the condition of the piece.
Buy a standalone policy
So what if you don’t live with the recipient and they don’t have home insurance? In this case, you’ll need to purchase standalone insurance for holiday gifts with an insurance provider that specializes in that particular item. For example, many providers specialize in electronic coverage and offer an easy way to protect a smartphone or laptop for someone without home insurance.
Think about auto insurance if gifting a new car
While surprising a loved one with a brand new car on their driveway on Christmas morning sounds like a wonderful idea, you’ll need to think about insurance first. Legally, you can only drive a car off the dealer lot if it’s insured. Of course, if you live with the recipient and share a car insurance policy, this is not a problem, as you can add it to your joint coverage. However, if the recipient doesn’t live with you, the easiest way to surprise them with their new car is to take them to the dealership instead.
As you can see, thinking about insurance for holiday gifts is essential when splashing out on something of value. As a general guideline, you should consider putting protection in place for any Christmas present above $500.