Protecting your jewelry, electronics and other expensive gifts from the holidays will save you money.
The holidays are long over, right? Wrong. You’ve still got some holiday financial clean-up to do.
I don’t mean figuring out what to do with that $15 gift card Aunt Nelly got you to Cat Barn. When clearly no one’s told her Mittens shuffled off to the big litter box in the sky two years ago.
And I sure hope that anyone aiming to pay off their debt didn’t add to their Visa or MasterCard last December. But, if you did, make a plan to pay that off. Most important, what often gets overlooked after the holidays is the need to get personal property insurance for any pricey gifts that you received.
If you were gifted expensive jewelry, pricey electronics, or some other extravagant gift – you should call your insurance agent. Because your brand-new bauble may not be covered against theft, damage or loss by your homeowner’s or renter’s insurance.
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Protect your pricey presents
Typically, most policies only cover a limited amount of your personal property. Limited amount, such as a maximum of $1,000 for each piece of jewelry or a $2,500 limit on all your rings, earrings and watches.
Let’s say you’re sweetie popped the question on Christmas Eve. You may be out of luck if that $5,000 engagement ring is lost or stolen. Adding a rider to your personal property insurance policy to specifically cover your most valuable items will solve that problem.
Riders come in two versions: a “floater” or an “all risk” policy. The floater rider extends you homeowners coverage up to the purchase price or appraised value of an item. An “all risk,” also called a “scheduled personal property” rider, covers most theft, damage or loss of your expensive jewelry.
The difference between the two types of coverage is how they cover you if something happens to your valuables. With a rider, you’ll need to prove that the damage or loss is covered under one of the provisions of your policy. With all risk coverage, the insurance company will have to prove that you aren’t covered.
“All risk” covers near all gifts
In most cases, you’ll want to go with all risk coverage. Which can include not only jewelry and electronics — but also can extend to cover antiques, collectibles, musical instruments, furs, firearms — and other valuables.
You’ll need to get an appraisal to set the value of your items to be placed on a rider. That means making a trip to a trustworthy local jewelry store or other approved professional. You’ll also want to occasionally review the values of your scheduled property as the market changes, especially in cases of items such as gold jewelry, which can rise and fall in relation to the current trading price of gold. If you’re purchasing items, you may not need an appraisal, just your receipt.
For some very valuable pieces, you might want to add separate jewelry insurance. That generally costs between 1 percent and 3 percent of the value of the insured property, and can extend your coverage beyond the perils covered by your homeowner’s insurance to cover accidents and unintentional damage or even loss. One strategy would be to use a floater or rider to cover most of your items, with a separate policy for a highly valuable piece.
Scheduled property costs about $1 to $2 per each $100 of value covered. Ask your insurance agent to compare options between all risk coverage and a simple rider, including the cost and types of loss or damage covered, as well as the cost of adding a separate policy.
Brian J. O’Connor is the author of the award-winning budget book, “The $1,000 Challenge:
How One Family Slashed Its Budget Without Moving Under a Bridge or Living on Government Cheese.”
Meet the Author
Article last modified on July 24, 2018. Published by Debt.com, LLC .