Exchanging gifts with loved ones can make the holiday season memorable, but an expensive gift gone missing will be remembered for all the wrong reasons. So before you waltz out of a jewelry store with a $5,000 necklace, make a plan to insure it. A good guideline to follow: If you purchase a gift above $500, or replacing it would cause a financial strain, you should probably have insurance for it.
Whether it’ll hang on a wall, sit in a garage or bring you down to one knee, here’s how to cover a big gift.
Expand your home or renters insurance
One simple way to insure a costly gift, so long as the recipient lives with you, is to expand your homeowners or renters coverage. Standard policies pay out if your belongings are damaged or stolen, which will cover gifts like bicycles and cameras.
But coverage for other valuables such as jewelry, art and collectibles is typically capped between $1,000 and $5,000. That’s after any deductible, which is the amount you pay before your insurance does.
You can expand your homeowners insurance coverage with a “scheduled” rider, floater or endorsement. Scheduled items are insured based on their cost or current value, so you’ll usually need receipts or an appraisal from a certified professional to get coverage. This is a great way to protect fur and jewelry, plus gifts that could increase in value, like art or heirlooms.
Talk to your agent or insurer to help you choose between coverage options, such as a scheduled rider versus standalone jewelry insurance for an engagement ring.
Buy standalone policies
Some insurers specialize in certain policies, covering only boats, electronics or jewelry, for example. If your loved one doesn’t have homeowners or renters insurance, these policies could provide peace of mind.
Also consider a standalone policy if the gift will be used as business equipment, a common exclusion on homeowners insurance policies.
Be extra careful when shipping a gift
The chance of a pricey gift getting lost, stolen or damaged increases if it needs to travel to its recipient. To ship something fragile, like fine art, use a professional shipper and packer so it’s not damaged before it arrives, and make sure the shipper has insurance — otherwise, you’ll need to buy it yourself.
Online shopping during a pandemic is to be expected. But before you click “purchase,” consider where the gift is arriving. It’s increasingly common for packages to be stolen, so if you order something expensive online, make sure it won’t sit unattended. Consider using a shipping method that requires a signature upon delivery, or slyly ask the recipient if they have a security camera.
Get auto insurance before driving off the lot
While it sounds magical to surprise your loved one with a new SUV wrapped in a big red ribbon on the driveway, it’s not as straightforward as holiday commercials want you to believe. The vehicle will need car insurance, including 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, they’ll need their own insurance.
Consider surprising them at the dealership instead of the driveway so the car is properly titled and insured from the start. But keep the big red bow — they’ll love that.