The information on moving insurance and mover's valuation available here is intended to provide you with background information on moving company insurance so that you can be better informed and take the steps you believe are necessary for your peace of mind.
Moving can be a very stressful situation. You can reduce stress by carefully considering your options for protecting your household possessions while they are in the care of your moving company. Moving companies, private insurers, and your current homeowner's or renter's insurance provider all provide varying levels of insurance or valuation protection for various causes of loss. Whatever mover you choose, it's important to plan ahead of time so you have enough time to gather the information you'll need to weigh your moving insurance and mover's valuation options.
Some Terms You Should Know
Damage, Loss and Perils
Before drilling down into the distinction between moving insurance and valuation, it's important to understand that two types of loss can occur during a move. Both types of loss are the exception rather than the rule, but they may occur during your relocation.
- 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 occurs without the moving company's fault and frequently results in damage to property other than the household goods you are going to move.
Most homeowners and renters are aware of the second type of loss and have either a Homeowner's or Renter's insurance policy that protects their personal property. Insurance policies typically have a deductible and offer coverage for either all-risk or named perils:
- 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 cover all-risk buildings and named peril personal property. Renter's insurance policies can be written on a named peril or all-risk basis.
Actual Cash Value vs. Replacement Cost Coverage
Actual cash value coverage in an insurance policy 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 by which the item's value is reduced due to its age or condition at the time of the loss.
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 United States, insurance company practices are regulated by the Insurance departments of each state. Each insurer is responsible for handling its customers' claims, and any complaints that arise during the claims process can be referred to the state's Insurance department if the insurer is unable to resolve them satisfactorily.
Movers, on the other hand, are NOT insurance companies. 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 is something that a typical moving company would not do. Nonetheless, they want to protect their customers in the event that their personal property is damaged or lost while in their possession. This is known as mover's valuation.
The term "valuation" in the moving industry refers to the predetermined limit of liability that a mover has for your property while it is in their possession. This amount is specified in your moving documents.
The Federal Motor Carrier Safety Administration (FMCSA), which regulates interstate and international moves that start or end in the United States, requires movers to provide their customers with at least two valuation options for an interstate move:
- Released Valuation is the standard protection that a moving company must provide at no extra cost. With this type of valuation, protection is provided at a rate of 60 cents per pound. A 10,000-pound shipment would be only $6,000 in value. Worse, the 60 cents per pound fee is applied to each item in the shipment. As an example, if a 40-pound television is damaged, the moving company's liability is limited to $24. Depreciation occurs, but there is no deductible or additional cost to the customer. Local and in-state moves may have different standard poundage valuations.
- For an additional fee, your mover can provide Full Value Protection. For some moving companies, this is now the default option. The FMCSA requires a base minimum amount of protection (valuation) of $5,000 or $4.00 per pound, whichever is greater, but movers can adjust the minimum amounts each year based on changes in the Consumer Price Index. So, at $4 per pound, a 10,000-pound shipment would be worth at least $40,000. The best part about this option is that the $4 (or whatever amount is purchased) per pound valuation does not apply to each item, so a 40-pound television is NOT limited to $160. It is instead limited to the cost of replacement.
- You may be able to select No Deductible, a $250 Deductible, or a $500 Deductible for this valuation option. The higher the deductible, of course, the lower the cost of the coverage. Unless specifically listed and valued on your shipping documents, moving companies are allowed to limit their liability for items worth more than $100 per pound.
- Moving companies sometimes offer additional valuation options:
- Declared Value - You choose a price per pound that you believe represents the worth of your possessions, such as $2, $5, or even $8. The valuation per pound is then multiplied by the total weight of your belongings to determine the total valuation for your move. As a result, if you choose $8 per pound and your goods weigh 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 in the previous example is not limited to $320, but is only limited by its actual cash value, which may be greater or less than $320.
- Assessed Value or Lump Sum - This option is based on value rather than weight, and it may be a good choice if you are moving a large number of fairly valuable lightweight items. Essentially, you specify the value of the goods being shipped, such as $25,000. The amount you specify becomes the maximum the mover can be held liable for if your entire shipment is lost.
- 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 care, custody, or control of the mover, 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 extra cost to have your moving company pack items that need 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.
Keep in mind that moving companies are not insurance companies. For casualty losses, you will need either a Homeowner's or Renter's Insurance Policy, a rider on your existing insurance policy, or a special moving insurance policy, also known as Relocation Insurance. If your employer is paying for your relocation, they may be self-insured or have arrangements with insurers for such occurrences.
Homeowner's Insurance Policy Limitations
Most homeowner's policies cover your belongings while they are in your home up to the policy limits. Property temporarily removed from the premises is usually limited to 10% of your personal property policy limit. If, on the other hand, you are moving all of your belongings from one residence to another and intend to insure them with the same company upon your arrival, you have a strong case that your coverage should not be limited to 10% of your policy limit. Check in advance with your agent (if you have one) or your insurer, and read your policy. In fact, before you relocate, make sure that your personal property is fully insured.
- 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 insurance policies are similar to homeowner's insurance policies, but they can be less restrictive at times, possibly due to the fact that renters move frequently and aren't concerned with buildings. Some better Renter's policies, for example, provide better protection as a type of moving insurance because they cover all risks anywhere in the world and are not subject to the 10% limitation for property located off the described premises. Some companies may even offer special insurance coverage for the duration of your move. If your current insurer is unable to assist you, you may want to shop around.
Moving Insurance Policies
Private moving insurance, also known as relocation insurance, is also available, though the number of insurance companies offering coverage is incredibly limited. Your moving company or employer (if this is a company move) may also be able to connect you with a specialty moving insurance company. You might come across coverage similar to that 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.