With the promise of good design, expensive materials and quality craftsmanship, luxury and branded goods do not come cheap. However, costly as Gucci, Prada, Hermes, and Louboutins may be, not every piece needs to be covered against theft, loss or damage.
Here’s what you should consider
Pros and Cons of Insuring Your Branded Possessions
There’s no hard and fast rule when it comes to insuring your branded goods. You’ll find some people advocating for insuring everything, while others maintain that doing so is a waste of time and money.
Also, there’s one irrefutable risk that no amount of insurance can cover against: If your item is limited-run or discontinued, you may not be able to find a brand-new replacement.
Notwithstanding the above, there are pros and cons to buying insurance for your branded goods, as follows.
Pros of insuring your branded goods:
- You can claim for damage, theft or loss of your item, which provides reimbursement for you to repair or replace your item
- You will have greater peace of mind and may be more comfortable using or wearing your expensive accessories and clothing
- Insuring your branded goods will reduce the overall cost of regaining your lifestyle, after suffering a catastrophic incident like a fire or flood
- Premiums are relatively cheap and affordable
Cons of insuring your branded goods:
- You have to pay premiums regularly, which adds to your expenses
- Your claims may not cover the full value of your items
- You may not be able to make a claim under certain circumstances
- There are no returns on premiums paid to insure your branded goods
Regardless of the above, there are three general principles that you should heed if you regularly spend money on high-end or luxury items.
1) Insure if Financial Loss Would be High
One way to determine if you should insure your luxury item is how much financial loss you would expect to suffer if the item gets lost, stolen or destroyed. If the loss would be significant, and financially difficult to replace, it would make sense to get insurance.
An S$3,000 Prada briefcase that gets lost in transit is hardly worth insuring – you’d just pop down to the store to get another one, probably in the latest design.
However, if it’s an S$50,000 Hermes Birkin that got destroyed, you’d likely think twice before buying a replacement (even if you happen to be sitting on a trust fund). In this case, having insurance would probably be in your best interest.
The rule-of-thumb when it comes to insurance is this: If you cannot afford the loss, buy insurance to cover against the risk. This applies whether you’re talking about life insurance, or general insurance (which you’d use for your branded items).
2) Insure if Your Items Grow in Value
Not all high-end goods are made equal. There are some that, due to celebrity endorsement, rarity or popularity, become collectors’ items and can be valued at many times that of their original selling price.
Take Air Jordans for example. The popular sneakers have found favor not only among basketballers but also hip-hop artists and designers. This has sparked off a cult following, with serious collectors willing to pay over $100,000 for a limited edition pair.
Another popular category would be watching. Fans of Rolex, Seiko, IWC and the like regularly trade their pieces via an active second-hand market, preserving their market value. Even the relatively affordable G-Shock brand is notable for certain limited edition pieces that can sell for thousands of dollars.
If the branded goods you buy are known for having collectors’ value, and you intend to own more than a few pieces, you should definitely consider insuring your collection. It might be worthwhile to have your items appraised, so as to determine the proper level of coverage you should get.
3) Insure if your Homeowner Policy is Insufficient
The most common scenarios for loss of branded items are fires, floods or home burglary.
Should you lose your possessions this way, you may find that your homeowners’ policy provides some cover for the contents of your home. However, there are sub-limits for each category of items, which may not be high enough to cover your luxury goods.
For example, you only be able to claim up to $1,500 for bags and shoes. Given the high prices of luxury goods, this sum would hardly be enough to cover your collection.
Check your homeowners’ policy to see how much cover is available for your high-end items. If the amount is insufficient, consider getting a separate policy to insure your prized possessions. If you don’t currently have one, you can apply for one online in just a few minutes.
By Ryan Ong
Disclaimer: All info contained herein is intended for your general information only and is not a substitute for insurance advice. If you have a specific question, please consult our insurance experts at 6702 0202.