After Christmas, Valentine’s Day is one of the biggest gift giving holidays of the year. Whether you are the proud owner of a shiny new engagement ring, a flat screen TV, or some other expensive delight, you’re probably too busy enjoying your new gift to think about practicalities.
But, as Benjamin Franklin once said, an ounce of prevention is worth a pound of cure. Once you’ve spent some time fawning over your new possession, it’s a good idea to consider how to keep it safe.
Jewelry and other big ticket items can be a large financial investment. A foolproof way to ensure your expensive belongings are protected is to carry renters insurance, which may cover the cost of a loss of an item due to fire or theft. Renters insurance might initially strike you as an unnecessary expense. But what most people don’t know is how affordable renters insurance really is.
According to the Insurance Information Institute, the average cost for renters insurance in 2012 was $15.58 per month. (This is, of course, an average cost and premiums can vary.) But considering that renters insurance covers theft, loss, or destruction of your personal belongings in the event of a fire, storm, or other covered peril, $15.58 seems like a pretty good deal.
That said, if you have a big ticket item you want covered – e.g. a new engagement ring that’s valued at $4,500 – you would have to add what’s called a floater (same thing as a “rider” or “endorsement”) to your renters insurance policy.
This is because renters insurance is not intended to replace big ticket items entirely, as it has caps on payouts. Because these caps generally range from $2,000 or $2,500, if your precious jewelry or other gift has a much higher value, you’ll be left considerably under protected.
The reason is – such policies only cover “named perils” and those don’t include accidentally dropping your engagement ring in the toilet and flushing it away or leaving it on the sink in a restaurant washroom. While the ring would still be considered “stolen” should it disappear from the restaurant or your beach blanket, it would only be covered up to the cap limit of your renters or homeowners policy.
That’s why you need additional insurance to cover your gift for circumstances or situations that are considered out of the ordinary, which the insurance industry has appropriately dubbed as “mysterious disappearance”. This type of protection comes in the form of a valuable articles personal property endorsement, also called a “floater”, that is added to your current homeowners or renters coverage.
Although some insurance carriers may also sell stand-alone valuables policies for high end jewelry and art collections, the norm for the average policyholder is the addition of a floater to your homeowners or renters insurance to override the cap limits.
However, keep this in mind – when filing a claim for the loss of a valuable piece of jewelry, proving the value, termed “proof of loss”, is imperative, if you expect to be reimbursed by your insurer.
Furthermore, insurance companies take mysterious disappearance claims very seriously and will conduct a thorough investigation that may take up to six months to pay out. Even more so, should the jewelry or item you’re reporting lost or stolen was recently added to your policy.
In order to properly validate your claim, you’ll have to produce receipts or appraisal reports along with photos for proof the item actually exists. In most cases, these will be requested prior to the policy being written as a safeguard against fraud. Additionally, your carrier may also require you to file a police report for the missing or stolen items.
You can’t put a price on love or peace of mind – but, with the right insurance on your precious Valentine’s Day gift, you can rest a lot easier.