Insuring holiday gifts

How to protect the holidays with gift insurance

Insurance might be the least exciting thing about gift giving this holiday season, but it’s still important. Doing so may protect you from a major loss if you bought a pricey gift, and it doesn’t take long. You can insure some gifts by making a phone call to your agent or a specialty insurance company. Others, such as cars or vacations, require your loved one to buy a policy in his or her own name. “Don't sacrifice preparedness for the surprise,” says Lisa Lindsay, executive director at the Private Risk Management Association, an insurance industry group that focuses on high net worth customers. Here’s what you should know:

Existing insurance may cover it

If you’re giving a pricey gift to someone who lives with you, the simplest way to insure it may be by expanding your homeowner’s 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, is typically limited to $1,000 to $5,000. That's after any deductible, which is the amount you pay before insurance pays a claim. You can expand your current policy with a rider, floater or endorsement. Steve Shiring, a vice president at Travelers Insurance, suggests talking to your insurer before you start shopping. An agent can help you choose between coverage options. For example, a scheduled rider versus stand-alone jewelry insurance for an engagement ring. For gifts that may appreciate in value, such as art or a collectible, consider a rider that pays the increased value if the gift is damaged or stolen. To keep such a policy or rider in force, you might need an appraisal every one to three years.

When a standalone policy is better

Some insurers specialize in certain policies, covering only boats, electronics, or jewelry, for example. These companies may offer more policy options than large insurers, such as coverage for losing the gift, but you might miss the convenience and savings of bundling with one insurer. Consider stand-alone policy if the gift is for someone who doesn't live with you, and you can't add it to your home insurance. You may also want to use a stand-alone policy if the item might be used for work, which would exclude it from many home policies.

Vehicles are a special case

If your gift involves four wheels and a big red bow, the person driving it will need his or her own insurance, and you'll need 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, he or she will have to insure it independently.