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Understanding moving insurance options

Whether your drinking glasses are Waterford crystal from Ireland or the weekly special from Wal-Mart, you'll want to be reimbursed if they break during the moving process. There are a variety of coverage options to consider when you've decided to relocate.

First and foremost, check your homeowners policy to see what, if any, coverage it offers. Mike Chrysler of the Indianapolis-based Insurance Institute of Indiana says most homeowners' policies will offer some coverage during a move, but only for the "main perils" they would cover while the merchandise was in your home -- such as fire or theft.

"Your homeowners policy does not cover the shifting and breaking of any articles while in transit," says Chrysler.

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Homeowner's policy often not enough
In addition, your current policy may stipulate that coverage is reduced during a move, says Sue Nudd of Mason-McBride Insurance Company in Troy, Mich.

"You can't make a general statement that if you have $100,000 coverage now you'll automatically have the same coverage in your move," Nudd says. Some policies might limit coverage to 10 percent of the current policy.

Another thing to consider, according to Nudd, is that some policies limit personal property coverage to 50 percent or 75 percent of the homeowners policy -- and that might not be enough. "Over the years, you've accumulated more in the way of clothes, furniture, etc.," Nudd says. "You might not realize how much personal property you have until an inventory is taken."

Nudd suggests adding endorsements, riders or enhancements to your current policy or consider insurance coverage offered by the mover.

Movers must assume some liability
All interstate movers charge 4 percent of the transportation cost for property and casualty insurance. It doesn't affect the insurance valuation options you may select, says Mary Scott Tuck of the American Moving and Storage Association. The P&C was added by the Department of Transportation to help offset costs of insuring trucks post Sept.11.

In addition, all interstate movers are required to assume liability for personal property at a rate of $0.60 per pound at no cost to the customer. It's usually called "released value" coverage. Most customers would probably find it inadequate, to say the least. If the mover bounces your 45-pound television down the concrete steps in front of your house, you'll be reimbursed only $27.

But, believe it or not, there are times when $0.60 a pound coverage is OK, says Tuck.

"If you have a homeowners policy that covers the moving of furniture or if you're a college student -- we all know what our furniture looked like right when we came out of college," she says. If it's not catastrophic to replace, the $.60 per pound might more than cover your loss.

Coverage levels vary
But peace of mind for most of us will cost more than $0.60 a pound. Here, according to the association, are some other coverage levels most moving companies will offer. Coverage amounts are subject to change and may vary according to state regulations, so check with your mover for the latest information.

  • Declared value: The value of your shipment is based on the total weight of the shipment times $4 per pound. If your belongings weigh 5,000 pounds, the mover would be liable for a maximum of $20,000.
  • Lump sum value: If the value of your shipment is greater than $4 per pound, you can get additional coverage by declaring a specific dollar value. If you say your 5,000-pound shipment is worth $100,000, you'll be charged a flat rate of $76 per $5,000 of assessed value.
  • Full value protection: Items that are lost, damaged or destroyed will either be repaired, replaced with a similar item, or a cash settlement will be made based on current market value of the item. Depreciation is not a factor in this type of coverage. The cost of full value protection varies from mover to mover and there is usually a minimum coverage level. Deductibles of either $250 or $500 are common unless a customer is willing to pay extra.

Most go for full value
If you're wondering what the most popular coverage is, according to 2001 figures compiled by the American Moving and Storage Association, most people opt for full value coverage without a deductible.

Understand that movers don't issue insurance polices, they offer "valuation coverage." Tuck says it's similar to an insurance policy but no physical policy is written. "It's a valuation option or a liability option as opposed to true insurance issuance. You don't get a policy, you get a bill of lading -- which is a contract between mover and customer."

What if you packed the boxes yourself? According to Tuck, if the mover accepts them they're covered at whatever valuation option you picked. Some movers may want to open boxes that contain fragile items to make sure they're properly packed.

If a box is marked "crystal" and the mover hears "clink, clink, clink," he may go "Oh, oh, oh," open it up and repack it. And that's going to cost you more money.

If the moving company packed your boxes, Tuck says you may not be covered if items are damaged after the packers leave and before the movers arrive. In other words, "If the packers came and went and Junior knocked over a box and things broke."

Take problems up with local agent
Speaking of things breaking: What do you do if you arrive at your new home and something in a box goes clink, clink, clink?

The association's Tuck says many moving companies now allow the drivers to settle broken items up to $250 in value. For items over that amount or missing items, customers need to check the bill of lading for the "destination company." More than likely that's the local agent for your moving company.

"Claims aren't recognized unless they're in writing and specify the item that was damaged and its approximate value. Normally, the customer has nine months from date of delivery to complete the forms and return them," says Tuck. "It is, however, a good idea not to wait until the last possible minute to file a claim. As soon as you have finished unpacking and have had a chance to inspect your belongings, begin your claim process if necessary."

If the problem resulted from packing damage, don't destroy or dispose of the box until the moving company tells you it's OK.

Tuck says the moving company will send an inspector who will usually recommend repairing or replacing the item, or offering a cash settlement.

"If the customer doesn't like the offer, they can go back to the company and say, 'Listen, this is a starting point but not where we want to end up,' " says Tuck.

At that point the dispute would go to the company's headquarters, which would send it to arbitration if the disputed amount is less than $5,000. The association acts as a conduit between the customer and the moving company and sends the dispute to the National Arbitration Forum. If the amount in question is more than $5,000, it could still go to arbitration if both sides agree -- or the customer may want to take it to court.

-- Posted: July 7, 2004

Guide to Moving
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