Maine’s Bureau of Insurance Urges Shoppers to Protect Holiday Purchases

Superintendent Kofman Encourages Consumers to Understand
Existing Insurance Coverage and Store-Offered Extended Warranties

GARDINER, MAINE — With Thanksgiving approaching, consumers are turning their attention to holiday gift purchases.  Keeping an eye out for Black Friday and Cyber Monday deals, many shoppers purchase significant items this time of year, including computers, flat-screen televisions, gaming consoles, jewelry and exercise equipment.

To help consumers protect their purchases and save money, Maine’s Superintendent of Insurance Mila Kofman is encouraging consumers to familiarize themselves with the insurance coverage they currently have, and to understand the pros and cons of store-offered warranties.

“This is a great time of year to find bargains, but it’s important for consumers to take time to protect those purchases,” Superintendent Kofman commented.  “Consumers should know what their existing insurance covers before purchasing additional protection, like an extended warranty.”

What to Know Before Making Holiday Purchases

Maine’s Bureau of Insurance and the National Association of Insurance Commissioners (NAIC) offer the following tips to help decide whether to buy additional protection.

Understand the Difference Between Insurance and Warranties.  Part of the holiday shopping tradition is the extended warranty offer at check-out.  However, a warranty is not insurance and does not cover damage in the way a homeowners or renter’s policy might.

A manufacturer’s warranty offers a certain kind of guarantee to the quality or performance of an item for a specified time period.  Some are lifetime warranties; others are one or two-year warranties that cover malfunctions or repair needs.  Warranties vary by product, model and manufacturer.

In addition, some retailers offer extended warranties that typically extend the original manufacturer’s warranty or provide additional perks and services, such as in-store repair.  Unlike a homeowners or renter’s policy, these warranties do not cover the cost of replacing the item if it is stolen, but some will cover certain kinds of damage to the product or product malfunctions.

Find out what your insurance policy already covers.  Check your homeowners or renter’s policy.  Find out what household items are covered under your existing insurance and if there are exemptions.  This type of insurance usually protects against theft or damage, though there may be particular details about what is covered.

“Many homeowners and renter’s insurance policies cover electronics and other expensive goods up to a certain limit,” said Kofman.  “It’s important to do a little research ahead of time so you make smart choices at the register and avoid spending more than needed.”

The amount and nature of coverage varies with each homeowners and renter’s insurance policy.  If a policy has actual cash-value coverage, it will reimburse for the current value of the property at the time of the claim, minus the deductible.  Remember that most property is worth less over time (called depreciation).  If the policy has replacement cost coverage, it will reimburse the amount it costs to buy a new item to replace the damaged item, minus the deductible.

“Know your policy and talk to your insurance agent before making your purchase.”  Kofman advised.  “Ask your agent about coverage amount limits to make sure your new purchases would be protected and that you don’t exceed your policy limits.  Certain valuables might be better covered with an insurance rider to your current policy or a new policy, depending on the circumstances.  Your agent can help you assess the benefits and costs when considering this option.”

Kofman also noted that renters who do not have renters insurance should take time to consider whether this protection makes sense for them.  Although a landlord should have insurance for structural damage to the building, this coverage does not extend to a renter’s personal property.  The average renter’s insurance policy costs between $15 and $30 per month.  Replacing all possessions would cost much more for most renters.

Maine’s Bureau of Insurance also encourages all Maine families to establish or update a home inventory.  Keeping a list of electronics and other valuable household items with model numbers and receipts is very important.  The list can save time and money if a loss occurs.  As holiday purchases are made, or other items are given away over time, the inventory should be updated and insurance coverage changes may be needed.

For More Information

Maine consumers with questions about coverage for holiday purchases—or any other insurance matter—are encouraged to contact their agent or get in touch with the Bureau of Insurance at 800-300-5000 or online at www.maine.gov/insurance.

The Bureau of Insurance is part of the Department of Professional and Financial Regulation, which encourages sound ethical business practices through regulation of insurers, financial institutions, creditors, investment providers, and numerous professions and occupations for the purpose of protecting the citizens of Maine. Consumers can reach the Bureau through its website at www.maine.gov/insurance; by calling 800-300-5000 in state; or by writing to Bureau of Insurance, 34 State House Station, Augusta, ME  04333.

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