Does Homeowners Insurance Cover Gift Cards? (Bankruptcy, Theft)

Reader YE  sent in an interesting bit of news that Erie Insurance recently announced that their homeowners insurance will now cover gift cards where the store goes out of business. Looking at the details, it’s not as generous as it sounded initially; the benefit comes with the following limitations:

• Reimbursement coverage is limited to $250 per gift card and limited to $500 total per policy period.
• The coverage will automatically be added to new and existing homeowners, condo and renters policies effective May 1, 2020, in Illinois, Indiana, Maryland, Pennsylvania, Tennessee, Virginia and Wisconsin. Coverage will be effective on June 1, 2020, in Kentucky and West Virginia. Erie Insurance is currently working with additional insurance departments to gain approval in the remaining states across ERIE’s footprint.
• Coverage provides reimbursement gift cards purchased at businesses within 100 miles of the customer’s residence if the business permanently closes within a year after the purchase of the gift card.
• Valid only for gift cards to local businesses that do not employ more than 100 full-time employees.
• (My understanding is that there is no deductible for this special benefit. If there would be, that would render the benefit irrelevant due to the deductible which is typically at least $500.)

That led me to wonder whether gift cards are ever covered in homeowners insurance, e.g. if your gift card gets stolen from your house. A google search turned up that apparently ‘stored value cards’ ARE typically covered by homeowners insurance, but they are treated as cash which usually has a $200 coverage limit. That’s still something. It probably won’t make sense to file just for a stolen gift card (deductible, premium increase, etc.), but worth adding in the gift card claim if you’re already filing a claim for a larger theft that also included gift cards.

I’d assume that the scenario of a gift card retailer going out of business is not traditionally covered under the $200 cash provision for most insurers. Erie Insurance, however, has now added this special benefit to cover such an instance of the retailer going out of business. It’s a nice benefit which can give people more peace of mind when buying gift cards from small local businesses.

If anyone notices a similar benefit from other insurers, please let us know and we’ll add it here.

(Tangentially, it’s been noted that an item stolen from a car is likely not covered by car insurance, but might be covered by homeowners insurance. So it’s possible that a gift card stolen from your car will be covered as well up to $200. In practice, it might not make sense to file a claim due to deductible, premium increase, etc., but interesting to keep in mind for the event of a larger claim.)