If you assume that you already have coverage for a lavish Valentine's Day gift or don't need it, you could be making a huge mistake. Check out these seven tips for insuring valuables before buying them.
Whether you’re giving your sweetheart a gorgeous diamond ring for Valentine’s Day or you’re the one who gets to wear the bling, don’t forget about protecting it with insurance. I know looping in your insurance agent may not seem romantic, but it can prevent a lot of heartaches if that expensive piece of jewelry gets damaged, lost, or stolen.
How to insure your valuables
Today, you’ll learn how to keep your Valentine’s Day gift or any valuables safe.
1. Get insured before you buy it
Anytime you’re thinking about making a big purchase, such as expensive jewelry, watches, or electronics, make sure you have a plan to insure it. Think about how devastated you’d be if you bought diamond earrings for your sweetie, and they got stolen or lost. I’m sweating just thinking about it!
Anytime you’re thinking about making a big purchase, make sure you have a plan to insure it.
Before you buy something valuable, communicate with your existing home or renters insurance representative or company. Find out if you need additional coverage—it’s likely that you do! In just a moment, I’ll give you some recommendations if you don’t already have a home or renters policy.
Let your insurer know what you’re planning to buy and how much it costs. If you’re still negotiating on price or you’re buying a second-hand item with an unknown value, start with your best estimate.
2. Get a certified appraisal
If the value of your Valentine’s Day jewelry is over a certain amount, your insurer will ask you to submit an appraisal. It must come from a gemologist who uses a variety of tools and their expertise to identify and value gems. It includes photos of your item and an estimated value.
Your insurer needs an appraisal to know precisely what they’re insuring. The document also protects you in case you need to make a claim.
The retailer who sells you a new piece of jewelry should provide you with an appraisal. However, an insurer may want an independent appraisal to verify the value. If you purchase heirloom or estate jewelry, it may not come with an appraisal.
You can find an appraiser by getting recommendations or doing some research online. The cost varies depending on how intricate the item is and how long the work may take.
For instance, an antique ring with many stones and old-fashioned gem cuts will take longer to analyze than a brand-new diamond solitaire. For a relatively simple piece, the appraisal may cost in the range of $150 to $250. But I’ve had heirloom pieces that cost nearly $500 to appraise.
While your great-grandmother’s wedding ring or a necklace from your valentine might be priceless to you, insurers will only pay you its appraised or actual value.
It could take a gemologist several weeks to complete your appraisal, and they need to have the item in their possession the entire time. So, don’t wait until the last minute to find out what’s required to get a Valentine’s Day gift insured.
Also, note that you can’t insure the sentimental value of any item. While your great-grandmother’s wedding ring or a necklace from your valentine might be priceless to you, insurers will only pay you its appraised or actual value.
3. Don’t assume you already have coverage
If you assume you have coverage for a lavish Valentine’s Day gift simply because you have homeowners insurance, that could be a big mistake. The amount of insurance on your home is different than the amount of coverage for your personal belongings.
Most standard home and renters policies include coverage for personal items like jewelry. However, specific categories of belongings come with coverage limits or caps. Jewelry, watches, and furs typically have a low insurance cap, such as $1,000 or $2,000. If you’re a big spender, that could be a fraction of the cost of your gift.
For example, if you buy an engagement ring worth $4,000, and your homeowners or renters policy only covers $1,000, you’d come up $3,000 short of replacing it. Plus, the cap applies to an entire claim, not individual items. If you had multiple pieces of jewelry stolen, you’d only receive up to the policy limit.
Jewelry, watches, and furs typically have a low insurance cap, such as $1,000 or $2,000. If you’re a big spender, that could be a fraction of the cost of your gift.
Other types of personal belongings that have insurance caps include silverware, computers, firearms, musical instruments, collectibles, and antiques. Keep reading to learn how to make sure your expensive items are adequately insured.
4. Get an insurance rider
If your existing homeowners or renters insurance doesn’t have a jewelry limit high enough to cover your posh purchase, one solution is to “schedule it.” You’ll also hear this called a rider, floater, or an endorsement to your policy. Scheduling an item means that you add more detail about it to your existing insurance policy.
One benefit of scheduling an item, such as jewelry, is that you’re covered for all types of losses. For instance, if you accidentally lose a wedding ring swimming in the Caribbean ocean on your honeymoon, you’re covered up to your limit. When your valuables are covered by a standard home or renters policy, without being scheduled, you typically only have coverage for specific events, such as loss from a fire or theft.
One benefit of scheduling an item, such as jewelry, is that you’re covered for all types of losses.
Also, don’t forget that you must pay a deductible when you make a claim. So, if you have a $500 deductible and a jewelry limit of $1,000, the most you’d receive from a claim is $500.
But a scheduled item doesn’t require a deductible. That means you wouldn’t have to pay any amount out-of-pocket to replace a Valentine’s Day gift that gets lost or disappears mysteriously.
Having a rider increases your premium, but it’s usually worth it. The cost might be $5 to $15 per $1,000 of insured value. So, an engagement ring that’s worth $6,000 could mean paying an additional $30 to $90 per year on your homeowners or renters insurance premium.
5. Get a stand-alone policy
Another option for insuring a precious gift is to get a stand-alone policy. This policy is separate insurance just for the item, not an add-on to an existing home or renters policy. Most insurers offer a valuable articles policy for specific items like jewelry, watches, furs, collectibles, and antiques.
Whether you own or rent your home, you’ll pay less for an insurance rider than for valuable articles insurance. The only exception would be if you have many expensive items to insure—so, shop and compare both options if you have a collection of valuables.
Most homeowners have insurance, but many renters avoid getting a renters policy because they mistakenly overestimate the cost. It’s surprisingly inexpensive; the average price is $185 per year. So, if you rent, get renters insurance first and then schedule an expensive item.
All the coverages I’ve mentioned protect your valuables at home or when they’re away from your home. Off-premise coverage kicks in when an item is stolen from your car or damaged while you’re traveling.
Additionally, home and renters insurance gives you liability coverage worldwide. It also pays living expenses, such as a hotel and meals, if you can't live in your home while repairs are made after a covered event, such as a natural disaster.
The bottom line is that if you rent and don’t have insurance, you’re putting your finances at risk. Take a few minutes to shop and compare quotes at sites such as Bankrate.com or Policygenius.com. But no matter your situation, you can always opt to insure a Valentine’s Day gift with a stand-alone policy.
6. Gift recipients are responsible for insurance
Many people are confused about who needs to buy insurance for a gift, the giver or the recipient? Well, it depends on who has the item. If you buy a gift to give, you need to have it insured while it’s in your possession.
If you have a receipt and appraisal, pass them along so the new owner has what they need to get proper insurance.
Once you give a gift away, the lucky recipient owns it and must insure it. If you have a receipt and appraisal, pass them along so the new owner has what they need to get proper insurance.
If you’re married or live together and have the same home or renters insurance policy, you don’t have to take any extra steps. But if you and your valentine have different households, the person who wears and enjoys the gift must make sure that it’s insured.
7. Keep an up-to-date home inventory
If you have home or renters insurance, but don't have a list of your personal belongings, it could be challenging to claim a loss. Imagine that your home or apartment got destroyed in a fire. Would you remember every item?
If you don’t have a home inventory, create one and add your Valentine’s Day gift to the list. At the least, have pictures or video of your belongings that you store in the cloud. While losing precious items can be devastating, the more documentation you have, the easier it will be to provide proof that you owned them and make an insurance claim.
If you got a cherished gift for Valentine’s Day or got engaged, congrats! Now make it a priority to protect it.