Are your holiday gifts covered under your existing insurance? If you have home insurance or contents insurance through a condo or co-op policy, then the gifts you have received over the holidays would normally fall under the coverage in your contents amount. The catch is, you have to make sure that your contents amount is sufficient to cover the value of new gifts received, and that there are no limitations on the types of items you have.
How to Insure High Value or Limited Items
If you have items that exceed the limit of insurance in your policy, you can still get it insured by adding it to your policy as a scheduled item. Scheduled item insurance is an add-on to your existing policy and ensures that in the event of a claim you will get the full amount.
What Kinds of Limitations Does My Property Insurance Have?
Your personal property coverage on your residential policy is subject to certain limitations and exclusions, so depending on the type of gifts, you may or may not be fully covered.
The two key areas to be aware of are:
- Content special limits.
- Liability limits.
Your insurance policy covers your personal items under 3 key areas:
- Dwelling Building
- Personal Property (Contents)
The Dwelling would not be relevant to most holiday gifts, however the Personal Property limits and the Contents limit would. In addition, there are sub-limits within your contents amount. So for example, if your personal contents limit on the front page of your insurance policy states that you have $100,000 of contents coverage, this does not mean that the full amount can be used for any item.
Here is a list of items commonly limited on your personal property insurance:
There are sub-limits in the wording of your insurance contract that you should be aware of which will affect the coverage of high value items like certain gifts.
What are the Special Limitations in the Contents Limit?
Special limitations can affect the insured value of some popular gift items such as:
- Property of a student away at school
- Computer Software
- Books, tools and instruments used for business
In the case of theft:
- Video games
In addition, there are some gifts that have become very popular, such as drones, that would not only require coverage under the personal property section of the policy, but the liability portion as well.
For example, if you purchased a drone for personal use, your drone would be covered as personal property, but in addition, you may have to look into liability concerns depending on how and where you will be using the drone. Drones have entered the marketplace as popular items for photo and aviation enthusiasts alike. Models can range from as little as $100 for toy versions, to thousands of dollars. Drones are not limited on the special limits of insurance, however would be subject to a deductible in the case of loss. If you’ve spent a significant amount for a new drone, you may want to consider insuring it specifically on the policy to avoid a deductible in the event of a loss.
Your Options for Insuring Jewellery
If you recently received a diamond ring as a gift, your main concerns would be to find out if it is covered as personal property. In order to insure your jewellery, it is recommended to provide a copy of the appraisal to your insurance company so that if there is ever a loss, you have already put a copy on file of the value of the item(s).
Why Insure Jewellery Specifically?
Some insurance companies offer special programs to insure diamond rings specifically, for example if they are valued over $25,000.
There are three key benefits to insuring your jewellery specifically:
- No deductible in a loss.
- No loss of the claims-free discount.
- Verified Value for a claims payout.
- Insurance of parts or pairs.
How Can You Increase the Amounts of Insurance to Cover Gifts?
Insurance companies recognise that people’s needs change at different times of their lives. Each insurance company provides several options.
- Insure the item specifically for an additional premium – Scheduled Items
- Choose a better policy that offers higher limits of insurance – Broad vs. Comprehensive
- Choose a better policy that offers greater scope of coverage – Liability and Umbrella Liability
Example of Insuring Jewellery Specifically on a Jewellery policy
Mary received a diamond tennis bracelet for her anniversary. The value was $15,000. The amount of insurance in her special limits of insurance was limited to a total of $10,000. It was not enough to cover her bracelet, and certainly not enough to cover her other jewellery items. She decided to get special jewellery insurance. Her new jewellery coverage allowed a verified agreed value to the bracelet at $15,000 and in a claim she knew she would get the full amount and not lose $1000 for her policy deductible.
This option allows you to insure your high valued item, and avoid making a claim on your home insurance if you have a loss. It also provides a specialized coverage for loss of parts, for example if a diamond or stone falls out of your favourite necklace, earring or ring.
Example of Changing to a Better Policy or Purchasing a Supplementary Coverage
A broad form policy does not cover mysterious disappearance. When Mary purchased a drone for her family, one of her concerns was that the drone might fall out of flight due to malfunction, and be lost. This would not be covered under a broad homeowner policy. She called her insurance and upgraded to a comprehensive policy form so that mysterious disappearance would be covered.
After speaking to her insurance broker, Mary was also advised that there may be greater liability risks involved with drones. There have been many incidents of injury where drones have fallen and hurt people, or almost hurt people. As a new drone user, she decided to purchase Umbrella Liability to cover any incident that might cause her to exceed the base liability on her home policy.
Purchasing an Endorsement to Supplement Coverage
Although items like cell phones and other mobile devices are not necessarily limited on the special limits of insurance on your policy, they would be subject to a deductible. Many insurance companies are taking things like this into consideration and may offer the option of adding endorsements that increase the amount of coverage or waive the deductible for these items. Ask your broker about Technology bundle endorsements or similar options, like Aviva Canada’s tech bundle.