Is Moving Insurance Worth the Cost?
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Whether you're moving across the country or just around the corner, you may want to consider moving insurance. But is it really worth the cost?
Moving is stressful. Where will everything go? What will the neighbors be like, and how will your family adjust? Perhaps more importantly, how will all of your possessions arrive safely?
Most homeowners choose to use a reputable moving company rather than pack and move themselves, but what kind of guarantees does the company offer if your goods are lost or damaged? Is the offered coverage enough, or do you need supplemental moving insurance?
How liable is the moving company?
According to the U.S Department of Transportation Federal Motor Carrier Safety Administration, all moving companies are liable for the value of any good they transport. This means they cannot damage your possessions and claim they have no responsibility, but it's also no guarantee of safety. There are actually two levels of basic liability any moving company must offer: "Full value" and "released value." These are known as "valuation" coverage, buy don't get fooled: They are not insurance.
Full value protection means the mover is responsible for the entire value of your shipment. This comes with an extra cost, and the mover has to (at their discretion) repair, replace or make a cash settlement for any damaged items.
RELATED: What Questions to Ask Moving Companies Before Hiring
Your other option is released value. This adds no extra cost to your move but significantly reduces the amount your moving company has to pay in the event of breakage. With released value, the company is responsible for no more than 60 cents per pound per item. In other words, if you have a 50-pound coffee table worth $1,000 that is damaged, the mover only has to pay $30 ($0.60 x 50). Choosing released value requires you to sign a wavier on your bill of lading before the move.
These valuation requirements are regulated at the federal, not state level.
When the moving company offers insurance
Some movers will try to sell you insurance policies offered through an affiliate of the company. These policies operate like standard insurance plans in that you'll be required to pay upfront for coverage and also shell out for a deductible if you need to make a claim.
But while the terms of some mover-offered policies may seem favorable, make sure you know what you're getting. These types of insurance are regulated by the state, not the federal government, and not all states allow moving companies to sell insurance.
If you buy a bogus policy, you can take the mover to court, but chances are you'll never recoup the value of your possessions. If you do buy a legitimate policy from your mover, consider that the provider is really an advocate for the company's interests, not yours. This means even legitimate claims may be processed very slowly or may be rejected outright, forcing you to court or, in the case of some contracts, to provider-selected arbitration. Be careful.
Third-party moving insurance options
You can also choose third-party moving insurance. Start by calling your current home insurance provider. Some include coverage for moves, whereas others are willing to add on moving coverage to your existing policy for a small fee. If your current provider doesn't offer insurance for your move, several reputable national companies provide third-party coverage.
Costs for this kind of coverage vary significantly but are usually based on the declared value of your possessions. To arrive at this number, you need to catalog everything you'll be moving and estimate the cost for replacement. For example, if the declared value of your shipment is $25,000 and you're moving from California to New York, you can expect to pay anywhere from $200 to $1,000 for full insurance coverage (movers doing the loading, transporting and unloading), depending on the deductible you choose. A $250 deductible means you'll pay more upfront for coverage, while a $1,500 deductible almost negates your out-of-pocket cost, so long as nothing goes wrong.
Be on the lookout for fraudulent moving insurance companies that are happy to sell you coverage but won't process your claim. Check Angie's List for reliable local reviews, and ask the company detailed questions such as how long they've been in business, what kind of claim/loss ratio they have and how they calculate their rates. Also be sure you fully understand the claims process and timeline for reimbursement.