At a Glance:
When you are planning to move, you may consider your options for getting moving insurance. While this coverage may offer some benefits to those in specific circumstances, moving insurance is not always worth the cost in the end.
Insurance can be a powerful tool for protecting valuable items, whether tangible or intangible. Most are aware of the most common types of insurance coverage available to consumers, including life insurance, disability insurance, health insurance, and auto insurance.
Each safeguards the insurance policy owner from financial loss should a specific event take place. Instead of putting the financial burden on the individual, the insurance company offering the policy takes responsibility up to the policy limits. The same type of coverage can be put in place for just about anything that holds some value or carries a risk. Moving is included in this category.
The process of relocating, whether down the street or across the country, comes with a degree of risk most individuals do not immediately recognize. For those who employ the help of movers, packers, or shippers to get their household belongings from one location to the next, loss or damage to property is a real concern.
Moving insurance is available for those who have worries about the state of their belongings during a relocation, but this type of coverage may not always offer as much value as one might assume. First, it is helpful to know what moving insurance is, what it covers, and how much it costs to put it in place.
What is Moving Insurance?
Moving insurance works differently than other common forms of insurance. It is not technically insurance coverage in the traditional sense; instead, it is a type of valuation. When purchasing a moving insurance policy from a moving company, that company provides a guarantee that, in the event that personal belongings are lost or damaged during the move, you will receive some level of compensation in the form of a repaired item, replaced item, or a cash settlement.
In fact, according to the Federal Motor Carrier Safety Administration (FMCSA), moving companies are liable for the household goods they move for you, but there are different levels of liability.
Despite this, moving companies are not insurance companies at their core, and therefore they are not regulated by the same federal laws or state laws governing insurance providers. However, moving insurance can be a valuable protection when it provides adequate coverage for lost or damaged items.
One common myth among individuals who are relocating is that their current insurance coverage protects them in the event of an issue during a move to a new home. A renters or homeowners policy may offer some coverage to policyholders when they relocate, but not all do so. It is necessary to look into this coverage with a current insurance policy to see if it is available when relocating and to what extent belongings are covered.
When selecting a moving insurance policy from a company, there are variations that can drastically impact the protection paid for if items are lost or stolen. Moving company insurance varies from full value protection to value by item and value by weight, all of which can influence how much you receive should an incident take place during the move. Because of these differences in moving insurance options, your best bet is to understand what moving insurance covers—and what it doesn’t.
What Does Moving Insurance Cover?
Full Value Protection Moving Insurance
If you hire a moving company to help you relocate, you may have an option for full value protection. This type of coverage is the most comprehensive in that it covers any damage done to your property during the course of a move. Full value protection will pay for the market replacement value of an item, replace it with a similar item, or pay for an item’s repair if damaged or lost in the relocation.
Released Value Moving Insurance
You may also have the option to select released value coverage, also known as basic carrier liability coverage. With this form of moving company insurance, protection against damage or loss is based on the weight of your items.
Companies will pay 60 cents per pound for any item damaged or lost in a move. Although this type of coverage is far less expensive than full value protection, you could end up falling short on compensation if belongings are damaged or lost along the way. For example, a high-priced electronic device that weighs very little may only be covered for a fraction of its value. It is important to recognize these differences when selecting a moving insurance option.
Is Moving Insurance Worth the Cost?
To determine when moving insurance is worth the cost, it pays to look at an example. If you opt for released value coverage for your move, an item weighing 50 pounds with a value of $1,000 that is lost or damaged only results in a $30 reimbursement. This means released value coverage is typically not worth the cost.
Under a full value protection plan, the entire cost of the item, based on its market value, is paid as compensation. For some, full value protection may be worth the cost of the insurance, but it depends heavily on the value of your personal belongings involved in the move.
Moving insurance can be beneficial as a form of protection against damage and loss during a relocation, but it is crucial to get the details of any coverage offered and compare the benefits to the price.
In most cases, released value protection is not worth much should something happen to your items. Full value protection may be of greater value, but only when you have high-value items to move.
Be sure to check with your moving company for insurance protection options, or look for outside moving insurance if you feel the need to transfer some financial risk off of your shoulders.
Also, always ask your current homeowners or renters insurance provider about coverage options, as this may mean additional moving company insurance is not necessary.