For richer, for poorer: Preventing wedding money fiascos
(Reuters) - By December, Holly Ellis and Brendan Spiegel had nailed down most of the details of their upcoming July wedding by signing a contract that would take care of just about everything - from food to flowers to music.
"We were so pleased with ourselves," says Ellis, a 35-year-old film and video producer from Brooklyn, New York.
That optimism evaporated quickly earlier this month when they learned that their venue, reBar in Brooklyn's DUMBO neighborhood, had shut down without warning, leaving Ellis and Spiegel out of pocket - by $16,000.
Now, they have to find and pay for a new venue, and hire vendors, with little chance of recovering any of what was lost - reBar's owner was arrested on charges of tax fraud and grand larceny.
What should they have done differently? Could they have prevented the financial fiasco that had ensued?
Buying wedding insurance or paying with a credit card could have changed the outcome, at least financially.
Indeed, similar maneuvers could help thwart a big hit to the wallet from other unpredictable factors, such as bad weather, illness or rogue photographers.
SAFEGUARDING YOUR MONEY
On the other end of the spectrum are Josh Rosenberg and Kristina Martin, who had bought a $255 wedding insurance policy from Travelers for their December union at reBar. They were among just two or three couples who had taken that step, out of about 200 with canceled nuptials at reBar.
Within a week of filing a claim, they got every penny back of more than $13,000 they had put down on their $22,000 event.
Like the other couples, they'll have to find an alternative venue and vendors, but unlike most, they still have an open claim if they lose other deposits. They had laid out an additional $2,000 for such things as a deposit to a photographer, Rosenberg says.
Wedding insurance is simple to get, with coverage provided by a handful of companies, like WedSafe (http://wedsafe.com), Wedsure (http://wedsure.com), and Travelers (http://protectmywedding.com). Each offers online price quotes, with standard policies costing from under $200 to more than $1,000, based on the size of the event.
The policies cover most things that can go wrong, from repairing the wedding dress to lost deposits, replacing missing rings, the impact of bad weather, ruined photos, a call to military duty and damage to gifts.
Still, only a small percentage of the more than 2 million weddings in the U.S. each year is insured for disasters.
Most of the "tens of thousands" of wedding policies written each year are just liability insurance required by some venues, says Robert V. Nuccio, president of the company that owns Wedsure.
The largest segment of claims, 25 percent, involves vendor-related problems, while another 20 percent involves venue issues, says Travelers Vice President Ed Charlebois.
Overall, however, claims are infrequent, he says.
The actual number of policies and claims is "proprietary information," says Nuccio, and the perception that nothing can go wrong keeps many wedding parties from even considering insurance.
"You think the chances of a loss are pretty small until something happens, and then you wish you had it," he says.
Rosenberg says while it is tough to get past losing the venue they wanted, insurance did what it was supposed to: "On the financial side we are okay, and that brings us a little comfort."
Paying with a credit card can also afford some protection.
Ellis and Spiegel specifically avoided charging their deposit to save a 3 percent fee, or about $500. What they missed out on was the consumer protection of being able to file a dispute with their card issuer over charges.
The Fair Credit Billing Act limits a consumer's liability to $50 for charges for services not provided, says John Ulzheimer, credit expert for Credit Sesame, a web-based credit management tool.
But there's a 60-day time limit, which can be tricky when you pay a deposit months ahead. Ulzheimer says you could argue the "service date" is the actual wedding day, and many card issuers will side with a good customer.
"American Express seems to have the best reputation resolving pretty much any type of consumer disputes," Ulzheimer says.
The other option is to negotiate directly with the service provider for a refund. The best strategy for customers is to choose reputable vendors, checking references and insurance coverage, says wedding planner Taryn Blake, who organizes events in southern Pennsylvania and northern Maryland.
Blake says contracts must includes a clause to cover failures, which may help if you pursue legal action.
While wedding planners can vouch for those they have worked with - part of the expertise for which they earn their fees - they do not provide any financial guarantees themselves.
After the jolt they received, even Ellis and Spiegel plan to get insurance for round 2 of wedding planning.
"Spending a couple hundred dollars to keep ourselves from losing thousands definitely seems worth it," Ellis says.