Have you bought a particularly expensive gift? Or are you giving somebody in your family an item now while you are alive? Gifts such as cars, art, collectibles, heirlooms, jewelry, etc. might be appreciated, but there is also a risk that they could be lost, stolen, or broken.
So, should you insure your pricy gift? It depends on what it is, and you may also need to have a discussion with the recipient; while this can ruin the surprise it can prevent a worse surprise later.
What Sort of Gifts Should Be Insured?
The basic rule of thumb is that if replacing the gift would cause a financial burden, then you should consider insuring it. This includes things such as:
• Original artwork
• Vehicles, especially classics
• Heirlooms and antiques
• Collectibles that are likely to increase in value
If your gift is greater in value than the single item limit on the person’s home or renters’ insurance or if they are not insured, then you should consider also purchasing a standalone policy to insure the gift for the first year or so.
What Kind of Insurance Should You Get?
First of all, if the person lives with you, check whether the item will be covered on your insurance. You may want to “schedule” the item so it will be covered up to its full value.
Homeowner’s insurance will typically cover “ordinary” gifts such as toys and concert tickets that are stolen from your home or car. However, it may not cover the full value of more expensive items.
If you are gifting a vehicle, then paying for the first year of insurance is a nice gesture, especially if it is a classic car. Make sure that the insurance is in their name. (However, if you are gifting a vehicle to somebody under the age of 25 it may be cheaper to add them to your policy).
If you are gifting a trip or vacation, also pay for trip insurance that will cover them if the trip is canceled. If it’s an adventure vacation, such as hiking at high altitudes, horseback riding, or scuba diving, make sure that their health insurance will cover them for that activity. If not, trip insurance that includes medical coverage is vital.
This may require some discussion with the person receiving the gift. For example, after handing over those cruise tickets, make sure that you talk to them about trip insurance.
Getting the Right Policy
For some items, a standalone policy is a no-brainer. However, you may find that you need to shop around. For example, insuring a classic car is not the same as insuring last year’s model. Trip insurance is something you should also be careful with. Many tour operators will recommend a specific insurer and make it very easy to choose them at the time of booking. However, this is typically an insurer they are getting a kickback from and may not be the best deal.
For other items, you may want to run the numbers between adding the gift as a specified item to your homeowners’ or renters’ insurance or getting a standalone policy. A standalone policy is likely easier to transfer and is a nice gesture even if the item turns out to be covered by their insurance moving forward. Art and antiques may be best insured through a specialist carrier, especially high-value pieces. Pets should also have a standalone policy that covers unexpected medical bills and potential liability if the animal injures somebody.
If you are giving an expensive gift, it’s worth considering whether you should insure the gift until it arrives at the recipient and potentially for a longer period of time. Contact Northeast Nebraska Insurance to discuss your options.