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Wedding insurance is a form of coverage sold to future bride and grooms meant to protect them from unforseen issues that may create problems for your nuptuals. While the product is marketed to provide peace of mind, it is important for customers to understand exactly how wedding insurance works along with what it covers. To help soon to be married couples we've taken an in-depth look at some of these plans to help you figure out if it will be worth it. This article focuses on the cancellation coverage. Separate liability coverage is also sold for weddings as well.
How Does Wedding Insurance Work?
Wedding Insurance falls under a category of insurance called Event Cancellation coverage. These policies are designed to reimburse policyholders for financial losses if an event is cancelled or postponed for reasons outside their control. The other major form of event cancellation coverage is event ticket protection. In the United States the two major underwriters of wedding insurance are Travelers and Nationwide.
For wedding insurance, policy coverage and benefits are broken into a number of different components which are the following:
- Cancellation or Postponement
- Extra Expenses
- Event Photographs and Video
- Event Gifts
- Special Attire
- Special Jewelry
- Loss of Deposits
- Professional Counseling (Exclusive to Nationwide's Wedsafe)
Each of these categories will have its own coverage limit, similar to auto insurance, which is the most your carrier will reimburse for that specific benefit. Policyholders will also have a deductible for each area of coverage though the amount tends to be relatively small.
Let's look at these categories and how they work.
Cancellation or Postponement Coverage
The first and primary piece of wedding insurance is the protection against the cancellation or postponement of the entire event. This is the broadest form of coverage and will cover your financial losses for nearly every aspect of the wedding if you are forced to cancel the wedding. This includes things like deposits paid, transportation, catering services, property rentals, hotel accommodations (even travel arrangements for your honeymoon!), special clothing or jewelry and other services tied specifically to your wedding.
Valid reasons for Cancellation or Postponement are things that affect the following:
- Venue: Any event that might change the usability or available of the venue. For instance if a fire or some other accident occurs at the location leading up the wedding, thereby making it unusable.
- Key Persons: Wedding Insurance policies also identify key participants, such as the wedding party, the married couples immediate family or other active participants. In a case where a person's absence is involuntary, the cancellation or postponement would be covered. Involuntary absences include illness/injury, changes in military leave and even severe weather related issues that impact someone's ability to attend (See more on weather below).
- Vendors: If a caterer, vendor or official doesn't show or cancels forcing you to change plans. It's also possible for you to use the Extra Expenses portion of your policy to pay for a new vendor.
With event cancellation coverage, its about things outside of your control. As a result there are a number of exclusions built into your policy about what your insurance company will not consider a valid reason for cancellation / postponement.
- Change of Heart: Any decision by either the bride or groom to not go forward with the wedding.
- Lack of Funds: The inability to pay for the venue, vendors or other expenses associated with the wedding. Unless this lack of funds is the result of involuntary unemployment.
- Weather Conditions: Bad weather alone is not enough of a reason to cancel your wedding. The only way weather related issues could qualify for reimbursement is if is bad enough to prevent the key parties or over half of the confirmed guests from reaching the event.
Extra Expenses Coverage
In some cases, even if something does occur, you may be able to avoid cancellation by simply paying more. This might include finding a different vendor, buying replacement items or even making alternate plans. In such situations, if it would cost less to pay for these added expenses than it would to cancel / move the entire wedding, your carrier will reimburse you for these additional costs under the extra expenses coverage.
Photographs and Video
This coverage handles financial reimbursement for any payments you made to the photographer/videographer in instances where they don't show, or the film/negatives are damaged before you receive copies. This includes situations where the vendor fails to load film or leaves the lens cap on! It does not cover cases where the quality of the product does not meet your expectations however. Simply being unhappy with the results would not be reimbursable, though you could work it out with the person you hired.
Event Gifts, Special Jewelry & Special Attire
These components handle damage or loss of items involved in the wedding due to theft or other events. In general the reimbursement will be calculated based on the cost of repairing or replacing the respective item. In cases where an gift, piece of clothing or jewelry is stolen, carriers require you to immediately report it to the police for a claim to be made.
Depending on your contract the insurance company may also make specific stipulations about types of damage that may be excluded. Damaged caused by weather might only be covered if it took place during the event.
For attire, your coverage may delineate the amount of reimbursement based on whether or not the damage occurred during or prior to the event. In the Nationwide contract, once the clothing has been worn they will only reimburse at a max 50% of the original purchase price. Due to the "difference in value between new and used attire."
Professional Counseling Coverage
Policies underwritten by nationwide have a component called professional counseling coverage. This covers the financial costs should the emotional stress of a cancelled or postponed wedding push one of the policyholders to seek professional counseling for up to 1 year following the date of your original event. This may however overlap with some health insurance coverage for mental health.
Shopping for Wedding Insurance
Purchasing a policy involves a one time premium payment for coverage. Your first choice you'll be asked to make is to select coverage limits. Both Nationwide and Travelers underwritten policies give you a choice of 10 coverage levels, with the category specific limits tied to each option. The higher the coverage limits the greater the cost of your policy. Limits for the cancellation and postponement coverage ranges from $7,500 to a maximum of $175,000. Additional expense coverage limits range from $1,500 at the low end to a high of $35,000. All other limits are generally between $1,000 to $10,500. Your choice of coverage level is the biggest factor in the cost of coverage
Two other factors may also apply depending on which provider you use is where your wedding takes place, and if you've elected to purchase special event liability coverage from the same company. Special event liability coverage protects you from damages should any of your guests get injured during your wedding, including potential risks due to the consumption of alcohol. Insurance companies love to give consumer discounts when they purchase more than one type of policy.
Is Wedding Insurance Worth It?
Deciding on whether wedding insurance is worth it will depend on your personal finances as well as the circumstances of your wedding. Some wedding venues provide catering and other services, reducing the number of vendors and payments. If something were to prevent the venue from being used in these cases, you're more likely to be refunded a larger portion of your expenses.
Consider what you could reasonably handle before needing to cancel or postpone your wedding. In cases where it's vital for all of the immediate family and active participants be at the event, you might look at all the moving parts. Your capacity to pay for unforseen circumstances is also important. If you can afford to pay out of pocket to fix any issues that come up, then it can make less sense to pay for coverage. The risk of cancellation is generally very low, so on average you're probably losing out.
One thing to know about wedding cancellation coverage is that insurance carriers expect a loss ratio of around 40%. The loss ratio is the % of total premiums paid towards claims. This means that only 40% of all the premiums a carrier collects will be used to reimburse consumers. The rest is used to pay for administrative and acquisition expenses as well as profits to the company.
Compare this to Health Insurance coverage which by law must use 80% of premiums towards claims. Consumers purchasing wedding insurance are generally paying a pretty big markup on their expected losses.