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Types of Insurance Coverage
Before going into the types of cargo coverage, there are two things consumers should be aware of:
- The term “fully insured” is often used by moving companies to convey that the customers’ belongings will be protected against loss or damage. Although this can be true, the term can be somewhat misleading. This broad term describes the coverage that the moving company has purchased for itself, usually relating to cargo insurance, liability insurance, and vehilcle insurance. Unfortunately, this does not specify the amount of coverage and a “fully insured” company may only offer $0.60 per pound cargo coverage which is extremely poor coverage.
- Insurance can only be sold by licensed insurance agents. A moving company can not sell insurance coverage. Movers can only offer to accept responsibility under their insurance coverage as they have care and control of your possessions. Movers may charge deductibles, surcharges, or limit liability but can not sell actual insurance coverage. However, moving companies can offer protection plans or valuation coverage. Consumers should know that these coverages are not regulated by the government and such contracts can be difficult to enforce.
There are several types of moving insurance/cargo coverage offered by moving companies:
- Full Replacement Value Insurance – This is the most comprehensive insurance available and is limited only by the maximum dollar value of the policy. If anything is lost or damaged, the moving company must offer to repair the item, reimburse you with cash, or replace it with an item of similar likeness and value. Some movers may limit their liability for expensive/high risk items. Moving companies offering to allow customers to benefit from this insurance coverage can not charge for it and, so, are more likely to be careful with your things.
- Market Value – The depreciated cash value of an item based on a value loss of 7% per year.
- Basic or Released Value Insurance – The minimum coverage required by law. Under basic coverage, movers are only responsible for 60 cents per pound. Imagine being reimbursed $120 for a 200 Lb china hutch destroyed in transit or less than $50 if the movers broke your 42″ plasma television. This type of coverage is almost useless if moving anything of any value at all.
Valuation Coverage or Protection Plans
- Declared Value – The value of your belongings is based on the weight of the shipment at a specific amount per pound. If the amount was $1.00 per pound, and your household goods weigh 10 000 pounds, the moving company would be liable for a maximum of $10,000. The actual settlement would be based on the depreciated value of the lost or damaged goods.
- Lump Sum Value or Assessed Value – For higher value shipments, you may need coverage that is based more on cost than weight. You can purchase coverage for a specific amount per $1,000 of value. This must be declared in writing on the bill of lading.
- Full Value Protection – This is the most expensive coverage and is compareable to “Full Replacement Value Insurance” except that the moving company is charging for the coverage. Lost or damaged property will be repaired or replaced. Usually there is a minimum coverage amount and applicable deductibles.
In any case, consumers should be aware that they can usually purchase a rider on their home owners insurance for “Goods in Transit”. This can often bridge the gap between coverage provided by the moving company and the actual dollar value of any losses. The downside to any claims made through your own insurance policy is that you would typically have a deductible to pay and your premiums may increase as a result of the claim.