Winter is here, and that means the holiday season is in full swing. Hannukah, Christmas, Kwanza and the Winter Solstice are just around the corner: come January there’s the Epiphany and Chinese New Year. There’s plenty of festivities to enjoy, and that almost always means a gift exchange.
When it comes to giving gifts, most people are comfortable spending a little extra at this time of year—spending a few more dollars on gifts for the people you care for is an easy leap to make. Others go the extra mile and give gifts that are truly luxurious: watches and jewels, designer clothing, new electronics, furniture, cars and so on.
A common fear with expensive items like these is, “what if they’re damaged before I gift them?” Fortunately, that’s where your homeowners/renters insurance policy comes in. In addition to protecting your house or apartment from damage, homeowners/renters insurance provides coverage for the property in your dwelling.
The limits of your coverage—and going beyond it
However, just because you have homeowners/renters insurance doesn’t mean that the beautiful diamond necklace or that cutting-edge digital camera is wholly covered. Many homeowners/renters policies limit the amount of coverage they provide for certain items, computers, silverware, stamp or coin collections, fine art and jewelry—usually up to $1,500. That’s when you need to speak with your independent insurance agent to determine if you need to increase your insurance limits or get a personal article floater policy—a policy that covers easily movable personal property—for your gifts. There may be limitations on the types of loss or damage that are covered, such as breakage or flood.
There’s also the possibility your expensive gifts may be stolen. If they are taken from your car, they are not covered by the typical automobile insurance policy. However, they may be covered, subject to a deductible, under your homeowners/renters policy—except when limited under the specific conditions mentioned above.
An aside about gifting a car
Gifting a car—or any automobile—is a gesture that a person will never forget, but it also has its own process. Before that car leaves the dealer’s lot, it’s going to need an auto insurance policy to cover it. That means you’ll have to take the car under your own policy—if you share a policy with the recipient, then you can simply transfer over the title.
How to take a home inventory
If you need to file a claim for lost property, be it a new gift or something you’ve owned for decades, you’ll need to prove you owned the item first. The best way to do that is to conduct a home inventory. A home inventory only costs a few hours of your time and requires that you have some way to record your belongings.
First, list all your major belongings and furnishings, with a brief description, any serial numbers, and any receipts or appraisals.
Second, back up this list with photos or a video. Photograph every wall of every room, and inside closets and cabinets. In the video, make comments for a verbal record, as well as a visual one.
Third, store the inventory in a safe place away from the home, such as a safe-deposit box or another family member’s home, or scan and store them on a flash drive or your online file storage system. Update this inventory whenever needed—like with all the new gifts you received during the holiday season.
That’s all it takes for the peace of mind that comes with knowing that you are adequately protected.
Actual cash value vs. replacement cost value
For your personal property, you also need to choose between actual cost value and replacement cost value. You may already have made this choice when it comes to insuring your home. Actual cost value means that the insurer will pay for the lost item’s value with depreciation. Replacement cost value means the insurer will pay for the item at its current value.
Conclusion
By having a conversation with your independent insurance agent about insuring your gifts this year, you can determine what kind of coverage you need for some of your biggest buys. A broken, expensive gift may put a damper on the holiday mood, but the knowledge that you’ll be compensated can set your mind at ease and let you enjoy the festivities.
Matt McDonough is PIA Northeast's writer, editor and content curator. Matt joined PIA Northeast in September 2023. Before that, he had been an editor for the online entertainment magazine Collider from 2021-23 as a copy editor for its lists section. Matt entered the world of journalism at his alma mater, SUNY New Paltz, writing and reporting for the college's student run newspaper, The New Paltz Oracle. He graduated from SUNY New Paltz with a Bachelor of Arts in English and a minor in Creative Writing in 2020.
