When you plan a move, one of the more important considerations is whether to buy replacement costs on moving insurance. The answer is-it depends. Even if you decide to have replacement costs, you'll still have more choices to make regarding the structure of the insurance.
Moving Insurance Options
Basic Coverage: Released Value
This is the basic level of insurance that movers are required to offer. There is usually no charge for this coverage, but that is because the coverage is minimal. With released value, the moving company will pay between $0.30 and $0.60 per pound of the damaged item. If the movers drop your 200 pound television set and pay you $0.60 per pound, you'll receive $120-regardless of whether the television set is worth more or less. Often this is the default coverage for a local move unless you request other coverage. On interstate moves, however, you normally have to specifically request released value insurance.
Intermediate Coverage: Declared Value
This is usually the default coverage provided on interstate moves (moving from one state to another), but you can also ask for it on local moves as well. Unlike released value coverage, there will be a charge for this coverage. The charge is based on either the total weight of your shipment, or a value that you declare.The total weight option of declared value insurance is often calculated by taking the weight of your items times $1.25. This means that a 3,000 pound shipment would have insurance totaling $3,750 (3,000 times 1.25).
If you feel that the insurance is too low because you think your items are worth more, then you can choose to declare a value instead. Your declared value is an estimate of the total worth of your shipment, regardless of weight. You will pay more for the insurance when declaring a value, so make sure that the insurance doesn't exceed the value of your items.
If your items are damaged, lost or stolen, you will receive depreciated value. If the 42" Plasma TV you bought two years ago for $3,000 now retails for $2,000, you will only receive $2,000 if your TV is damaged. Depreciated value is acceptable in situations like this when you are able to buy a substitute item for the depreciated amount. However, in cases where an item appreciates in value over time, or is difficult to replace, you may not be satisfied with depreciated value.
Also, the mover may not be held liable for damage to extremely high value items such as fine china, furs or jewelry, unless the items are specifically declared on your moving contract.
Full Coverage: Replacement Cost Insurance
The best coverage is replacement cost coverage, also known as full value protection. Replacement cost insurance is insurance that will pay the full cost necessary to repair or replace a damaged item. It is not necessarily the cost that you originally paid for the item.
Using the TV analogy again, let's say you recently purchased a new TV at a deeply discounted price of $1,500 from a store that was going out of business. You knew the TV costs $2,000 elsewhere, so you decided to purchase it now even though you knew you were moving in a few months.
If an accident were to happen and your new TV was damaged, with replacement cost coverage you would receive $2,000, since it is not possible to find the same TV for the $1,500 that you paid.
This level of insurance is only available for interstate moves, and it can be expensive. You can lower the cost by choosing to have a deductible. If you choose a $250 deductible, you would be paid $1,750 for the damaged TV instead of $2,000.
Replacement Costs on Moving Insurance: Considerations
Replacement cost insurance is very nice to have, but it may be more coverage than you really need. Take the following into consideration when deciding whether to buy replacement cost coverage:
- The age of your items
- How easily replaceable your goods are
- Whether your items have appreciated or depreciated in value
- What items the movers will be shipping. If you are safely taking the most hard to replace items in your car, only determine your insurance needs based on what the movers are transporting.
Moving Insurance Tips
- If there is damage to your items, you must still pay for the move when your goods arrive. You must go through the claims process to be compensated.
- Damage must be clearly visible. If your TV develops problems after moving, the company is only liable if there is visible damage caused.
- Items in boxes that you pack are only covered if there is visible damage to the outside of the box.
- You have nine months after the move to file a claim.
- The mover must acknowledge your claim within 30 days of you filing it.
- If a settlement cannot be reached, you can sue for damages.
- Keep an inventory of your items and what their value is. Have receipts available to backup your claim.
- Check with your homeowners insurance company to see what coverage they provide.