The moving insurance and mover's valuation information provided here is designed to give you some background information on moving companies insurance so you'll be better informed and you can take the steps you feel are necessary for your peace of mind.
Moving can be a stressful experience. One thing you can do to make it less stressful is to evaluate carefully your options for protecting your household possessions while they're in the custody of your moving company. A wide range of options are available from moving companies, private insurers and your existing Homeowner's or Renter's insurer that provide varying levels of insurance or valuation protection for different causes of loss. No matter which mover you select, it pays to prepare in advance of your move so that you'll have time to gather the necessary information you'll need to weigh your moving insurance and mover's valuation options.
Some Terms You Should Know
Damage, Loss and Perils
Before considering the difference between moving insurance and valuation, it helps to understand that there are two basic categories of loss that might occur during a move. Both types of loss are the exception and not the rule, but either or both could occur during your move.
- Damage, breakage, marring and other types of loss caused by the mover's or shipper's negligence, carelessness or accident.
- A casualty loss, such as a fire, windstorm or similar damage that might occur through no fault of the moving company and that often results in damage to other property besides the household goods you are moving.
Most homeowners and renters are familiar with the second type of loss and will usually have either a Homeowner's or Renter's insurance policy that covers their personal property. Insurance policies typically carry a deductible and provide coverage either on an all-risk or a named perils basis:
- An all risk insurance policy provides coverage for any cause of damage or loss unless the cause is specifically excluded, such as wear and tear - and typically breakage and marring.
- A named peril insurance policy provides coverage only for the causes (perils) that are specifically listed in the policy - such as fire, lightning, windstorm, etc.
Most Homeowner's policies provide all-risk coverage for buildings and named peril coverage for personal property. Renter's policies may be written on either a named peril or all-risk basis.
Actual Cash Value vs. Replacement Cost Coverage
In an insurance policy, actual cash value coverage means that the insurer will pay to repair or replace covered property for an amount up to today's price to replace the item less depreciation - the amount that the item's value is reduced because of its age or condition when the loss occurs.
Replacement cost coverage means that the item is insured for the full amount of today's replacement cost without subtracting depreciation.
Movers Valuation vs. Moving Insurance
In the US, insurance company practices are regulated by each state's Insurance department. Each insurer is responsible for handling the claims of its customers and complaints arising during the claims process can be referred to the state's Insurance department if they are not satisfactorily resolved by the insurer.
On the other hand, moving companies are NOT insurance companies. In order for them to sell moving insurance, they would need to be licensed to sell insurance and would be subject to the same regulations as insurance companies. That's not something your typical moving company would want to do. Still, they want to offer some protection to their customers if damage or loss occurs to their personal property while it's in their possession. This protection is known as mover's valuation.
When used in the moving industry, valuation is the predetermined limit of liability that a mover has for your property while it's in the mover's possession. This amount is specified within your moving documents.
For an interstate move, the Federal Motor Carrier Safety Administration (FMCSA), which regulates interstate moves and those international moves that begin or end in the US, requires that at least two valuation options be made available by movers to their customers:
- Released Valuation is the standard protection that a moving company must provide at no additional charge. This type of valuation provides protection at the rate of 60 cents per pound. A 10,000 pound shipment would have a total valuation of only $6,000. Worse yet, the 60 cents per pound applies to each item in the shipment. So if a 40-pound television were damaged, for example, the moving company's responsibility for the television would not exceed $24. Depreciation applies, but there is no deductible and no added cost to the customer. Standard valuations per pound may differ for local and in-state moves.
- Full Value Protection is available from your mover at an additional charge. Some moving companies now make this option the default. The base minimum amount of protection (valuation) mandated by the FMCSA is $5,000 or $4.00 per pound, whichever is greater, but movers are allowed to adjust the minimum amounts each year based on fluctuations in the Consumer Price Index. So at $4 per pound, a 10,000 pound shipment would have a minimum valuation of $40,000. The best part of this option is that the $4 (or whatever amount is purchased) per pound valuation is not applied to each item, so a 40-pound TV is NOT limited to $160. Instead, it's limited to its actual replacement cost.
- You may be able to select No Deductible, a $250 Deductible, or a $500 Deductible for this valuation option. Of course, the higher the deductible you choose, the lower the cost of the protection. Moving companies are allowed to restrict their liability for items that are worth more than $100 per pound unless those items are specifically listed and valued on your shipping documents.
Moving companies sometimes offer additional valuation options:
- Declared Value - You select a cost per pound that you think represents the value of your possessions, say $2, $5, or even $8. The valuation per pound is then multiplied by the total weight of your goods to arrive at the total valuation for your move. So, if you select $8 per pound and your goods weigh in at 10,000 pounds, your total valuation is $80,000. Although each item is subject to depreciation (actual cash value), the limit is not applied per item, so your 40 pound TV used in the previous example is not limited to $320, but is only limited by its actual cash value - which may be more or less than $320.
- Assessed Value or Lump Sum - This option is based on value and not weight, and if you are moving a large number of fairly valuable lightweight items it might be a good choice. Essentially, you specify the value of the goods you are shipping, like $25,000. The amount you specify becomes the limit the mover can be liable for if you lost your entire shipment.
Be sure to discuss and understand available moving valuation options and their costs with your moving company and remember that valuation is not moving company insurance. As a rule, selecting an option beyond the standard Released Valuation is well worth its relatively minor cost.
Movers Valuation Restrictions and Limitations
Moving valuation protection won't pay for:
- Items in boxes not packed by your movers, unless the exterior of the box or carton is obviously damaged, the damage occurred while the box was in the mover's care, custody or control, and the damage to the carton was responsible for the damage to the item inside. To avoid problems pack items properly, use sturdy cartons, or pay the additional cost and have your moving company pack items you want to be protected.
- Casualty type losses, which were discussed earlier, including fire, windstorm, hail damage, and the like. The reason this type of occurrence falls outside of the protection of mover's valuation is they typically have no control over these types of losses.
- Damage to items marked as already damaged on your inventory list. No one should expect a mover to pay for items that were damaged before the mover even took possession of them. Be sure to check your inventory lists carefully before signing them.
- Items placed in a self-storage facility that is not under the mover's control.
- Damage caused by mold or mildew.
- Loss to pairs and sets unless the damage or loss occurs to all items in the pair or set.
- Any loss or damage not resulting from the negligence of the mover.
Remember, moving companies are not insurance companies. For casualty type losses you need either a Homeowner's or Renter's Insurance Policy, a rider on your existing insurance policy, or a special moving insurance policy, which may also be referred to as Relocation Insurance. If your company is paying for your relocation, they may also be self insured or have arrangements with insurers for these types of occurrences.
Homeowner's Insurance Policy Limitations
Most Homeowner's policies provide coverage for your belongings up to your policy limits while they are at your residence. Property that is temporarily off premises is typically restricted to 10% of your personal property policy limit. However, if you're moving all of your possessions from one residence to another and you're going to insure them with the same company on your arrival, you have a good argument that your coverage should not be limited to 10% of your policy limit. Check with your agent (if you have one) or with your insurer and read your policy in advance of your move. In fact, before you move, make sure your personal property is properly insured to its value. Don't expect you Homeowner's policy to provide coverage for breakage or damage related to the move. But know in advance what would happen in the event of a casualty type of loss. Look for:
- Is there any restriction or limitation for your property when it's in transit or in the care, custody, control of the moving company?
- If your property is covered while it's being moved, what are the limits for special items, like jewelry, cash, fine art, business property, etc.?
- Do you have a special "floater" policy on specific valuables - like a diamond ring or a piece of artwork - or do you need one? Typically, a floater will cover the named property no matter where it's located when the loss occurs and will also pay even if the item is simply lost.
- Check your personal property coverage. While you may have replacement cost coverage on your home, you could have only actual cash value on your personal property. Additionally, it's very common that your home is insured on an all risk basis (discussed earlier), while personal property is only insured for named perils.
- If your property is going to be in storage for awhile are there any policy restrictions or exclusions? Does it matter if this is a self-storage facility or a mover's warehouse?
Renter's policies are similar to Homeowner's insurance policies, but they can sometimes be less restrictive - possibly because renters move frequently and they're not concerned with buildings. For example, some better Renter's policies provide better protection as a form of moving insurance because they cover all risk coverage anywhere in the world and are not subject to the 10% limitation for property off the described premises. Some may even provide special insurance coverage for while you're moving. If your current insurer can't help you, it may pay to shop around. Just do so well in advance of your move, purchase an adequate amount of coverage and plan to keep your coverage in force at your new location.
Moving Insurance Policies
Private moving insurance, sometimes referred to as relocation insurance is also available, although the number of insurance companies providing coverage is very limited. Your moving company or your employer (if this is a company move) may also be able to put you in touch with a specialty moving insurance company. You may find coverage similar to those of one Internet moving insurance provider:
- Full Replacement - Valued Inventory - With this option you list every item you are moving that you want protected and you declare the replacement cost of each item on the list. If an item isn't listed, it isn't covered. This option may be available for interstate, intrastate, and international moves. To insure your shipment fully, you need to list all items being shipped.
- Full Replacement - Lump Sum - You declare a lump sum value of your possessions being shipped, which acts as your policy limit. You only need to list items that cost more than $500 to replace.