Consumers will spend a record-breaking $6.4 billion on Valentine’s Day jewelry purchases this year, according to a recent survey from the National Retail Federation. The annual survey shows that total Valentine’s Day spending in the U.S. will reach $14.2 billion, another record, INSTORE Magazine reported Jan. 30.
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“There is more and more money floating in the economy and more individuals are spending, so it does not surprise me that it should be a good Valentine’s Day for jewelry,” said Pamela Alphabet, Associate Vice President, Regional Practice Group Leader, Personal Insurance, Burns & Wilcox, Scottsdale, Arizona.
The expected $6.4 billion in jewelry sales “is a huge figure,” but not necessarily unexpected, said Rachel Hillis, Underwriter, Private Client, Burns & Wilcox, Farmington Hills, Michigan. “With the current economy, we are seeing an increase in both the number of individuals purchasing luxury goods and the amount spent,” she said.
With the current economy, we are seeing an increase in both the number of individuals purchasing luxury goods and the amount spent.
Recipients should ensure these items are covered by insurance. Typically, Homeowners Insurance alone does not provide adequate coverage. A separate Personal Articles Floater policy should be discussed, Alphabet said. “You want to make sure to properly insure it, and right away,” she said.
Separate insurance policy for jewelry often needed
According to the NRF survey, another area of major spending this Valentine’s Day will be clothing, with consumers expected to spend $3 billion on apparel gifts this year. According to a recent Yahoo! Finance report, Gen Zers are increasingly spending on luxury goods such as designer bags, with one members-only concierge service noting that this group makes up its fastest-growing and highest-spending segment. From designer coats and handbags to high-end jewelry, many of these items will not be sufficiently covered on an individual’s Homeowners Insurance policy.
Under most standard Homeowners Insurance policies, items like jewelry can be covered up to a certain value, which will vary depending on the policy and carrier, Alphabet said. However, even items that are within that value threshold may not be adequately protected.
Not everybody is going to get $50,000 earrings for Valentine’s Day; most will not. The big thing is to make sure they understand the limitations of their Homeowners Insurance and pursue specific jewelry coverage as a Personal Articles Floater for those items.
“Most Homeowners Insurance policies do have a sublimit within the policy, but that being said, it is not all-risk, it is not all-peril,” she explained. For example, a typical Homeowners Insurance policy may cover vandalism, theft, and fire, but not mysterious disappearance. “In addition, remember that your Homeowners Insurance deductible would apply,” she said.
A Personal Articles Floater, meanwhile, will generally cover all perils, have no deductible, and provide worldwide coverage. “That can be really important,” Alphabet said. “Not everybody is going to get $50,000 earrings for Valentine’s Day; most will not. The big thing is to make sure they understand the limitations of their Homeowners Insurance and pursue specific jewelry coverage as a Personal Articles Floater for those items.”
Sometimes referred to as Inland Marine Insurance, Personal Articles Floaters function similarly in Canada and help protect against losses due to fire, theft, severe weather, breakage, and other risks, said Michelle Allemang, Manager, Personal Insurance, Canada, Burns & Wilcox, Vancouver, British Columbia.
If it is a lower-valued item, there will typically be some coverage on Homeowners Insurance, but understanding those limits and being familiar with what is included is so important.
“Between different Homeowners Insurance markets across Canada and the U.S., the limits of coverage that they will include for different categories of collectibles can vary,” she explained. “If it is a lower-valued item, there will typically be some coverage on Homeowners Insurance, but understanding those limits and being familiar with what is included is so important. At certain levels, there are many advantages to specifically scheduling items on an appropriate Personal Articles Floater coverage form.”
Coverage for mysterious disappearance, for example, is often critical for jewelry, Hillis added. “That is probably the biggest cause of loss for a lot of individuals — the item is lost and they are not sure what happened,” she said.
Time is of the essence after big purchase
About 41% of consumers buying an engagement ring do not acquire insurance, Experian noted in a 2022 report, and a 2021 ValuePenguin survey found that 6 in 10 individuals say that their jewelry is uninsured. The buyer of a high-value Valentine’s Day gift may secure coverage in some cases before even picking up their purchase, but in many cases it will be left to the recipient of the item, Hillis said.
“They are now the owner of the gift and may need to take it upon themselves to insure it — not necessarily the individual who bought it for them,” she said. “That may be a gap in the process. I think there is a lack of education around what to do next when you are the recipient of a high-value item. It might not be something that fits on your standard Homeowners Insurance policy, and it is should be something that they talk about with their insurance broker.”
These individuals should be prepared with any receipts, appraisals and other documentation they may have for the high-value item. “Gathering any important documents like that would be important if you want to make sure you have adequate coverage,” Hillis said. “Keeping these records for their own personal insurance documentation is also important in the event of anything happening to the item.”
If the recipient already has a Personal Articles Floater for a jewelry collection, they may have automatic coverage for new acquisitions within a certain period of time, Alphabet explained.
“Some might give you 30 days to add that item, which is nice — but most do not,” she said. “Typically, you have to notify your insurance company or broker right away when you are buying something. Sometimes you know ahead of time and sometimes you may not, but whatever you do, you want to get it covered promptly.”
Consumers should also understand whether their policy includes replacement cost value or actual cash value. This distinction is key, especially as jewelry is increasing in value in many cases, Alphabet said. “Actual cash value typically pays damages equal to the replacement value minus depreciation,” she said. “Replacement cost value is the dollars needed to replace the item without deducting for depreciation.”
Since replacement cost value is still limited to the amount shown on the policy, individuals should have their items appraised every few years to ensure adequate coverage, she said.
Consider jewelry storage, alarm systems
In the U.S., just over half of adults said they planned to celebrate Valentine’s Day this year, Statista reported on Dec. 18. In Canada, 39% of Canadians plan to celebrate Valentine’s Day this year, compared to 48% in 2023, according to the Retail Council of Canada. Beyond insurance considerations, individuals who give or receive high-value gifts on Feb. 14 should also think about how they will store their items.
“In the case of bringing home a high-value item before you get the right coverage in place, you want to think about your protections at your own house — where are you going to store the item and who will have access to it?” Hillis said. “Central station alarm systems are going to be a main focus, especially when your collection has grown to a certain monetary value.”
Individuals should also take protections when they are traveling, including using hotel safes or keeping valuable jewelry with them, she added. In some cases, an insurance carrier may require items covered by a Personal Articles Floater to be in a safe or a home protected by a central station fire and burglar alarm.
“If they have an in-home safe, they will get better considerations in the market,” Allemang pointed out. “At certain limits, some of these protective measures are required.”
For high-value jewelry, “cleaning and care are important,” Alphabet added. “Make sure that it stays clean, that it gets repaired if something is broken, and think about where you are going to store it,” she said. “These are things that can help avoid any potential losses.”
