So, you received a lavish Valentine’s Day gift that’s to die for. Whether it’s a diamond engagement ring or other posh jewelry, after you’ve thanked your sweetheart, don’t forget to protect your precious gift with the right insurance.
That should give you some financial protection to soothe your sadness if the piece gets damaged or disappears. Here are seven facts to know about insuring your most beloved belongings.
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1. Sentimental value is not insurable. Gifts from your valentine might seem priceless to you, but insurers won’t share your passion. They allow you to insure a personal possession for its actual or appraised value only, not its sentimental value.
2. Homeowners or renters insurance may not cover the full value. Don’t make the mistake of thinking that your dazzling Valentine’s Day gift will be completely covered by your homeowners or renters insurance. Standard policies come with caps, such as $1,000 or $2,000, on certain types of high-value items, such as jewelry, watches, furs and fine art.
So, if your gift is worth more than your policy limit, you could fall far short of the cost to replace it.
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3. Homeowners or renters insurance doesn’t cover an accidental loss. If you need to make an insurance claim on an expensive belonging, the type of loss you experience is important. For instance, if your gift is damaged or lost due to a peril that’s covered by your policy, such as a theft, fire or windstorm, you’ll get a payout up to the cap, minus your deductible.
But what about mishaps, like accidentally flushing a diamond ring down the drain, finding a large gemstone missing from its setting or having a valuable ring slip off your finger in the ocean? Unfortunately, these upsetting misfortunes won’t be covered — unless you buy an add-on to your policy, which goes by different names, such as a rider, floater or endorsement.
The extra coverage increases your home or renters premium, but covers any type of calamity that might occur to your gift, including maddening accidents. The additional rate depends on various factors, including the insurer, the item and where you live, but could range from $10 to $85 per $1,000 of value.
4. Riders don’t require a deductible. While adding a rider slightly increases your homeowners or renters insurance, the good news is that it doesn’t come with a deductible. That means that if your Valentine’s Day gift mysteriously disappears, you won’t have any out-of-pocket costs to replace it, up to your coverage limit.
5. Separate valuables insurance is an option. If you don’t own a home or have renters insurance to begin with, you can buy a separate policy just for your valuables — although it typically costs more than an add-on policy.
Studies show that most renters don’t have a policy and mistakenly overestimate the cost. Coverage for renters is surprisingly inexpensive, so if you’re in the uninsured renters camp, don’t dismiss its ability to protect your finances.
A renters policy not only protects personal belongings from theft or damage at home — but also at off-premise locations, such as in your car, storage unit or while you’re traveling. Renters insurance also gives you liability coverage worldwide and pays your living expenses if you are displaced from your place while covered repairs are being made.
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6. Gift recipients are responsible for insurance. If you buy an expensive gift for your valentine, you’re responsible for insuring it. But once you give it away, the lucky recipient bears the burden of insuring it.
So, make sure to pass along a copy of the receipt or appraisal, so the next insurance company knows the current value of the item.
7. It’s wise to keep a home inventory. It’s a good idea to maintain an up-do-date inventory, including pictures or video of your belongings. Keep it in several safe places, such as a storage account in the cloud, on a flash drive, in a locked filing cabinet or in a bank safe deposit box.
While you may never get over the loss of a precious gift, the more documentation you have, the easier it will be to make a successful insurance claim.
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7 Facts About Insuring Expensive Valentine’s Day Gifts originally appeared on usnews.com
