Decking the halls with costly gifts such as electronics and jewelry means you’ll need to review your home insurance to make sure they're covered in case of theft or damage.
Electronics and jewelry are among the list of top five planned gift purchases this holiday season, according to the Lifestyle Monitor Survey. In fact, the National Retail Federation estimates 23 percent of people will ask for jewelry, a 10 percent jump from 2009.
But just as you are aggressively hunting for bargains on electronics, jewelry and other gifts, you should be a “smart, aggressive shopper” for home insurance quotes, says Michael McRaith, the Illinois insurance director and a committee member of the National Association of Insurance Commissioners.
“Homeowners need to understand what coverage they have before buying that special holiday gift," McRaith says.
Standard homeowner's and renter's insurance policies include coverage of household items, including electronics and other expensive items, but up to a certain limit. State Farm Insurance spokesman Dick Luedke says there's generally a $5,000 limit for electronics and a $1,000 limit for jewelry.
If you buy something that's excluded from coverage or whose value exceeds the limits of your policy, should you consider additional coverage, McRaith says. The cost for extra coverage varies -- it's based on the value of the item that's being insured and the risk of loss.
Some steps to take toward shoring up your insurance coverage for electronics, jewelry and other valuables include:
• Conduct a home inventory before or right after you buy or get holiday gifts to estimate how much these possessions are worth.
• Compile a list of all your personal possessions and their estimated value. Record information such as the make, model and serial number of a piece of electronic equipment.
• Get items such as jewelry appraised. The number of diamonds and carats, along with the cut, color, clarity and gram weights of gems, should be noted.
• Keep sales receipts or purchase contracts for big-ticket electronics and jewelry.
When you talk to your insurance agent about your home insurance quotes, consider these options for additional coverage:
1. Cash value coverage: Most home insurance policies will include this, which will reimburse you for the current cost of the property at the time of your claim, minus the deductible. For instance, if you want to submit a claim for a TV that was purchased three years ago, won't receive the amount you paid, but a percentage of the original price based on age, wear and tear.
2. Replacement cost coverage: Under this policy, you're reimbursed for the full value of the item you're seeking to replace without a deduction for depreciation. However, this coverage costs about 10 percent more than actual cash value, according to the Insurance Information Institute.
3. Personal property article coverage: You can "schedule" a specific property to be covered under an amount higher than what your standard homeowner's policy offers. Items that can be scheduled include cameras and jewelry. Prab Randhawa of the Prism Insurance Agency in Riverside, Calif., recommends "scheduling" property if it's worth more than $2,500. “You should add coverage for the entire amount, [because] if it were stolen, you wouldn’t want only half of the money back, but schedule as much as you can reasonably afford," Randhawa says.
4. Floater policy: This provides coverage for loss or damaged personal property, whether it's in your house or away from home. “The big thing with the floater is it covers losses of any type, including accidental losses such as dropping your ring down the drain,” says Michael Barry, a vice president at the Insurance Information Institute.
Aside from doing an insurance checkup, you can protect what you're giving and receiving by:
• Keeping your home well-lit.
• Locking all doors and windows.
• Storing valuables in locked boxes or hidden areas.
• Having a neighbor pick up mail or packages while you're away from home.
• Stopping newspaper deliveries while you're gone.
• Refraining from discussing gift purchases and holiday vacation plans on social media sites. That's an invitation to thieves, Luedke says.
• Investing in security systems. Many homeowner's and renter's policies offer discounts if security systems are installed.