Christmas is almost here, and you may be filled with excitement about surprising your loved one with that expensive Christmas gift. In all the excitement, don’t forget about the importance of insuring it. Whether the gift will sit in the garage, hang on the wall, or someone will live in it, here’s how to cover your big gift.
Some gifts you can insure by making a phone call to your agent or insurance company. Others - such as cars or vacations, condos, fine art, high-end electronics - require your loved one to buy an insurance policy in his or her own name.
Existing insurance may be enough
If your gift is for someone who lives with you, the easiest way to insure it may be to add it to your homeowner’s insurance or renter’s coverage. Standard policies pay out if belongings in your home are damaged or stolen, but coverage for valuables - such as furs, art and jewelry - typically have a limit. That’s after any deductible.
You can expand your current policy with a “scheduled” rider, floater or endorsement. Scheduling items onto your policy insures them based on cost or current value. For this reason, you’ll likely need a bill of sale or certified appraisal to cover the gift.
Items that gain value need special coverage
For gifts such as fine art, antiques, or heirlooms, all of which may gain value, a rider that pays the increased value is a good investment in case the gift is damaged or stolen.
An appraisal may be needed every one to three years, if you have this kind of policy. Your insurance agent can probably suggest an appraiser.
A stand-alone policy
Your independent insurance agent may offer more policy options than large insurers, such as coverage for losing the gift; but don’t miss the convenience and savings of bundling with one insurer.
Here are some cases where you may want a stand-alone policy for a gift, rather than using home insurance:
- The person getting the gift doesn’t live with you, and you can’t add them to your home insurance
- You or the recipient don’t have homeowner’s or renter’s insurance
- If the gift is used for work, it would be excluded from many home policies
- A different type of policy is required for the gift, such as car or travel insurance
Vehicles as a gift
If your gift includes four wheels and a gigantic bow tied around it, the person driving it will need his or her own insurance. And you will need coverage for it before you drive it off the sales lot.
If you share an auto insurance policy with the gift recipient, just add the car to your shared policy and transfer the title after the surprise.
If the lucky gifted person does not live with you, he or she will have to insure it independently. You might consider surprising your loved one at the dealership so the car is properly titled and insured from the start.
No matter what your gift is, talking with your independent insurance agent before you decide can help. You can choose better coverage options with a little professional guidance.