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    Does My Insurance Cover My Gift Cards?

    What do you buy for that special someone when you can't think of anything else? With increasing frequency these days, the answer is a gift card. The National Retail Federation has reported that Americans spend more than $26 billion on gift cards during the holiday shopping season, and the average consumer spends more than $120. The reasons are simple -- gift cards are easy to purchase, never come in the wrong size or color, and the recipient is guaranteed to get an item she wants with it. Like anything else of value, however, they come with risks. Some have fees attached to them, and some expire if the owner does not use them within a certain period of time. They are also vulnerable to theft, disappearance and destruction. If your gift cards are stolen during a burglary or burn up during a house fire, will a homeowner's insurance policy reimburse you for them?

    The standard homeowner's policy provides partial coverage for gift cards. It limits coverage for money, bank notes, coins, "stored value cards," smart cards and similar cash-like items to $200 for all property in that category. Also, the policy covers personal property, including cash and similar items, only for a list of 16 causes of loss. The list includes such causes as fire or lighting, windstorm or hail, explosion, smoke, vehicles, theft, vandalism, weight of ice, snow or sleet, and others. The policy provides no coverage if a cause that is not on the list is responsible for the loss.

    A few examples will illustrate how this works.

    Joe receives a $50 gift card for an electronics store for his birthday and leaves it in his living room with his other gifts while he goes out to celebrate. Someone breaks into his home and makes off with all the gifts. His policy will provide full coverage for the clothes, DVD's and workout gear he got and the full $50 for the gift card. This is because the value of everything in that category of cash-like items was less than $200.

    Joe's family can't think of a thing to get him for Christmas, so he gets a sweater and a pile of gift cards to various electronics and sporting goods stores and coffee shops. He feigns enthusiasm for the cards and leaves everything under the tree when he goes out to visit friends that night. Unfortunately, he has forgotten to water the tree for two weeks; an exposed tree light wire ignites it. The resulting fire cooks his downstairs. The policy covers the damage to the home and contents, but it pays only the $200 maximum for the $300 worth of gift cards.

    Next year, Joe's gift cards survive Christmas Day and, because he enjoys being stuck in traffic jams, he goes to the mall the day after the holiday to use them. However, when he steps up to a cash register with a Blu-Ray player under his arm, he cannot find any of the cards. He searches his car, every pocket in his coat, pants and shirt, and every place he went to in the mall, but he never finds the missing cards. Unfortunately, because disappearance is not one of the causes of loss listed on the policy, his insurance will not pay anything for them.

    Some insurance companies may offer to increase the amount of coverage and the covered causes of loss for these items, so check with a professional insurance agent to identify those companies and find out the cost. For a small amount of money, you may be able protect yourself against the loss of these common gifts.

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