4 things to know about shipping valuation coverage vs. insurance

Determine whether shipping insurance or valuation coverage best meets your needs when using shipping companies.

Knowing how to protect your goods during shipping can take a load off of your mind and help you focus on the journey ahead. Liability for your goods during shipping can vary significantly between moving and shipping companies. To protect yourself against damages, it’s important to understand four things about coverage before you enter into an agreement.
 

1. Valuation coverage is not insurance

Insurance is a contract between you and an insurance company. You pay a premium, and the insurance company will protect you from loss up to the limit covered in the policy. It may also provide coverage for loss due to acts of God, fire and other unforeseen events. On the other hand, valuation coverage is regulated by Federal law and is a level of liability that shipping companies assume—meaning that, if your goods are lost or damaged, the mover agrees to pay a specified amount and will only pay on a claim that is directly caused by the mover.
 

2. Shipping companies cannot sell you insurance

Only an insurance company or licensed agent can sell you insurance. Don’t assume your moving company will cover the full cost of your goods should they become lost or damaged. Be careful of unscrupulous moving companies who will present valuation coverage as insurance. This practice may constitute fraud, and should a claim arise, you could find yourself undercompensated for lost or damaged property.
 

3. If you purchase insurance, insure for the proper amount

If you choose to decline valuation coverage and purchase third-party insurance, insure your goods for 100% of their value. If your property is insured for less and you have loss or damage, you could face significant out-of-pocket costs. Take the time to properly assess the value of your goods.
 

4. Under Federal law, moving companies are required to offer valuation coverage

Under the Federal Motor Carrier Safety Administration (FMCSA) regulations, a moving company must offer you at least two different levels of liability: released value protection (RVP) and full value protection (FVP).


RVP
 

This will protect your property at $0.60 per pound, per item, and is included at no additional cost. In the event of damage, you’re compensated by the weight and not value of the damaged item. Though RVP is the most economical valuation coverage option, protection is minimal, so you must sign to elect RVP instead of FVP. Keep in mind you could end up being grossly undercompensated for damage to an expensive item that doesn’t weigh very much.

FVP
 

This coverage requires movers to be liable for the replacement value of the item with options to repair it, replace it with similar or pay a cash settlement. This option will generally cost you $8 to $12 per pound, per article, and is the highest level of protection available other than insurance. Be aware that items of extraordinary value (more than $100/pound) must be declared on your shipping documents. If not, your mover will not be liable for loss or damages. You have the right to decline both valuation options and purchase your own third-party insurance to protect your move.

Before signing a moving contract, understand exactly what your moving company offers and have them take you through the types of valuation coverage.

Questions about valuation or other shipping coverage? Contact us to talk about your upcoming move and the options available to you.