Insuring that special gift for the holidays

Posted on: Tuesday, December 17, 2013

You’ve seen the ads. There’s a brand new car in the driveway on Christmas morning, complete with an enormous bow. Or, a woman opens a box under the tree, only to find expensive jewelry inside. At any point did you ever wonder if the recipient has enough insurance to cover that present? That question certainly takes a lot of the magic out of the moment, doesn’t it? Well, welcome to the mindset of an insurance broker.

The fact is, giving an extravagant gift can be romantic, memorable, and even joyous. It could also be an insurance nightmare if the proper precautions aren’t taken. Nobody wants to think about it, but awful things like theft, loss, and damage could happen to that special gift at any time, and it would be tragic for such a lovely gesture to turn into heartbreak.

Jewelry

Most homeowner’s policies cover gifts, so long as the gift doesn’t far exceed that policy’s limits. Some policies may include a temporary rider, providing extra coverage for valuables which exceed the limits, but it is best to know this information before the gift is presented. It is also important to know if your policy covers replacement cost or actual cash value. Replacement cost will replace lost or stolen items up to policy limits, without taking a deduction for depreciation. Cash value coverage, as the name implies, will pay the cash value only, minus depreciation. This means that jewelry should come with an appraisal document, along with a receipt for the item, to present to your insurer.

Cars

Giving a car is far more difficult to keep a secret. Each state requires varying amounts of information on a bill of sale, such as the year, make, model, and vehicle identification number of the car, as well as the name and address of the gift recipient, and the value of the car. They also are usually required to offer proof of insurance, so that will have to be available to the person making the purchase. Additionally, these five other steps should be taken.

  1. The insurance company should be notified.
  2. The vehicle needs to be registered with the DMV, and all fees must be paid.
  3. The vehicle must be inspected.
  4. License plates will need to be transferred, or new plates obtained
  5. Your state’s title requirements must be met, including (in most states) the formal notification that the car is a “gift”.

Santa has a lot of things on his mind, and a lot of responsibilities. Sadly, when it comes to the REALLY BIG gifts, he also has to deal with insurance agents. 

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