Insurance vs. Valuation – What’s the Difference?

Some moving companies often tell their customers that their goods will have “insurance” so if they have any loss or damage during the move they would be covered “in full.” Unfortunately, that is misleading information that can lead to confusion for anyone needing to file a loss or damage claim during their move. For this reason, it’s important to understand the difference between insurance and valuation before you move.

Insurance is a term used in law and economics. It is something people buy to protect themselves from losing money. People who buy insurance pay a “premium” (often paid every month), receive a policy from the insurance carrier and they promise to be careful (a “duty of care”).

Valuation is a contractual limit of liability based on tariff rates available. The customer has two options to choose from: Full Value Protection and Released Value Protection (based on $0.60 per pound, per article). The selection made by the customer then limits the mover’s liability in the event of loss or damage during transit.

Released Value Protection
This is the most economical option, offering minimum protection at no additional cost. Claims for loss or damage are based on weight multiplied by a certain amount per pound. For example, if the movers lose or damage a 10-pound stereo component valued at $1,000, your settlement would not exceed $6 (10 lbs x $0.60). Think carefully before agreeing to the Released Value option. If you choose it, you will be asked to sign an agreement stating you understand the limitations of this option.

Full Value Protection
This is the more comprehensive plan available for the protection of your belongings. Upon your purchase of Full Value Protection, the moving company assumes liability for your entire shipment. Under this option, the moving company will either:

  1. Repair the item OR
  2. Replace lost or damaged items at its option OR
  3. Make a cash settlement at the current market replacement value, up to the total declared value of your shipment.

The minimum declared value of a shipment for Full Value Protection is $10,000 or the dollar amount per pound times the total weight of the shipment in pounds, whichever is greater. The exact cost for Full Value Protection varies by mover and may be subject to various deductible levels of liability that may reduce your cost.

High Value Items

Under Full Value Protection, movers can limit their liability for loss or damage to high value items, unless you specifically list these items on a High Value Inventory Form. A high value item is any item whose value exceeds $100 per pound (such as jewelry, silverware, china, furs, antiques).

Information and forms are available to help with understanding valuation and to ensure you can determine the limit of valuation needed on your shipment. Please take a moment to review the links below:

High Value Inventory Form

Customer Declaration Form

Customer Rights and Responsibilities Form

FMCSA – Understanding Valuation and Insurance

If you have further questions regarding valuation and how it works, please do not hesitate to contact us.