Types of moving insurance

Moving guides - October 6, 2018

When you’re relocating, you’re going through a particularly hectic process. You should definitely prepare yourself for some of your stuff getting damaged, or for something being broken. And that’s true even if you hire professional movers. However, that’s what insurance is for! If you’ve got something broken, then at least you can recuperate some of the value. Be aware though – things aren’t that simple. In practice, there are a few types of moving insurance, and you should know what they are. That’s why we’ve prepared a useful breakdown of these different types below!

What is insurance at all?

If you ask any personal finance experts, they’ll tell you just how important they consider insurance to be. In fact, they’ll tell you that it’s one of the most important resources in your adult life. Basically, insurance is a type of policy to protect you against uncertainty. Of course, we’re talking about financial uncertainty. And the fact is – no matter how steady your job is, or how well it pays – there are always costs you can’t predict. While those costs are generally low, there are certain types of costs that can completely ruin your personal finances if you’re not insured.

Home insurance, car insurance, or even life insurance – all of these are designed to shield you from untimely financial costs. And among the many other types, there’s also moving insurance. Such a policy is there to protect you against costs in case some of your things get sustain damage in transit.

A broken computer screen on a brown tile floor.
Moving insurance is useful if you fear something being damaged in transport!

Moving clauses in home insurance policies

First of all, you should know that you might already have a type of moving insurance. Or rather, it might be a part of an existing policy. How so, you ask? Well, some home insurance policies have clauses about moving insurance. Or on the other hand, some home insurance firms offer moving-related options to their clients. However, this isn’t something you should just assume that you have – you never know what to expect. We recommend contacting your company and asking them directly. Sure, you may already have some moving insurance in your home policy, or you have an option to add it.

Different types of moving insurance

Sure, a clause in your home insurance policy is all fine and dandy – but let’s take a look at actual, distinct moving policies. So, what is moving insurance? In short, this type of insurance is precisely what it implies. We’re talking about a policy that’s supposed to recoup the value of your items if they’re damaged in transport. But now the question is – how do the insurance companies determine the value of these items? Do you need to have receipts for everything?

Well, no – but that’s both good and bad. You see, moving insurance has a certain structure. For a second, let’s think about what moving services look like. Basically, you’re transporting a lot of goods – your entire household. But this isn’t just one specific type of goods we’re talking about – they’re very different. You’ve got everything from books to expensive electronics in there. That’s why moving insurance generally determines value in terms of the weight of the items you’re moving. Also, there are three basic types of moving insurance out there:

  • Basic mover liability
  • Value-based coverage
  • Full replacement value – which basically means that movers replace the item, or give you the full value in cash.

Basic liability is the most affordable type of moving insurance

Okay, so we’ll cover the basics first. So, what’s the most basic kind of moving insurance out there? Well, it’s something we call carrier liability – your moving company being the ‘carrier’. You should know – this isn’t really a separate moving insurance policy at all.

In fact, this is the most basic kind of protection that moving companies offer you for your items in transit. You see, this is actually a policy that is in every moving contract, and it’s something that every moving company with a license provides. And you don’t pay anything extra for this – it’s all a part of the fee you pay to your movers. Basically, we’re talking about the minimal insurance they have to offer you by law – and for free. And unfortunately, you’ll soon see that it’s not very useful.

Why? Well, imagine that the movers damage something during transport. With this kind of carrier liability, they generally have to recoup you for just 60 cents per pound of the article. Bear in mind though, this may vary from state to state. But yes, if your iPad sustains damage, and it weighs about a pound – you’ll get just 60 cents for it. As you can see, although this is basically free insurance – it’s almost completely useless. That’s why many people opt for more expensive options.

A closeup picture of cents and pennies, representing money from moving insurance.
With basic moving insurance, you may end up only getting back a few cents!

Coverage based on decreased value

On the other hand, you’ve got another type of moving insurance that is a lot more useful to customers. We’re talking about coverage that has its basis in the value of the items in question. So, how does it work? Well, for starters, everything that you’re moving is assigned a value in money. This is a record that the moving company keeps – they’ll use it later to determine how much an item is worth.

And now comes the bad part – while this is a better form of insurance, it’s also more expensive. Rather than a part of your moving fee, this is something you pay for separately. In most cases, the movers are liable for 1.25 times the combined weight of everything you’re moving. So, to put it in perspective – if you’re moving stuff that weighs 5,000 pounds, you have insurance for $6,250. So, how much does this cost you? Generally, for every thousand dollars in liability, the moving company charges you seven dollars. While this is a bit more costly – at least you know that your stuff is safe and sound.  

A person pulling out dollar bills out of a wallet.
Value coverage is more expensive – but also a lot more useful!

 

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