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Moving Insurance: Full Value Protection Regulation

by Gadi Binness, Relocation Insurance Group, LLC

On May 15, interstate movers will be subject to new regulations pertaining to how they handle and pay for damage or loss to their customers’ household goods. Currently, movers are required to offer consumers two options:
  • Full value protection, making the mover liable for the replacement value of lost or damaged goods in the shipment. In this scenario, the mover has the discretion to repair, replace or pay cash value for the loss.
  • Released value, making the moving company liable for no more than 60 cents per pound per article.
In addition to these two options, movers may offer customers a third-party insurance product. The new decision issued by the Surface Transportation Board (STB) is intended to provide additional protection for customers of interstate moving companies by adopting the following key changes to the full value protection requirement:
  • The moving company is now required to include the cost of full value protection (assuming replacement cost liability) in the customer’s written estimate. In the past, most movers have placed this information on the bill of lading with no specific highlight or emphasis. In the more prominent location, a higher percentage of customers may choose full value protection.
  • A 12-point disclosure must be included on the estimate.
  • If the customer does not provide a stated shipment value, the default released value is the higher of $6,000 or $6 per pound, times the shipment weight.
  • If the estimate is based on cubic/linear feet, the mover cannot calculate liability by using the shipment weight, so the shipment must be weighed to establish FVP liability in the event of total loss.
  • If there is no weight certificate in place, the mover is responsible for full cargo value, without limitation.
  • A 10-point valuation statement must be signed on the bill of lading.
If more consumers opt for full value protection, as is expected, moving companies could find themselves spending significantly more time and money on claims handling. This heightened focus on full coverage could eventually lead to a moving company’s loss of revenue, customers’ complaints, lawsuits and potential cancellation of cargo insurance policies. Now is the time to proactively think about how to protect profit from this operational change, before it goes into effect on May 15 of this year.

Steps to protect your profit:

  • Carefully review the decision, to ensure your company is in full compliance and consult with legal counsel as needed.
  • Establish your new rates and deductibles for the full value protection option.
  • Remember that you can offer third-party insurance in addition to the STB required options.
  • Review claims reporting and handling procedures so you’re ready to professionally respond to additional claims.
Train employees to proactively manage claims situations to avoid escalation and lawsuits.
Purchase full value protection insurance to cover YOU (the moving company) against any damages to customers’ goods. This new type of coverage protects you under both options – if the customer chooses the released value option and if the customer chooses full value protection. In addition to protecting profit, it protects a moving company’s motor cargo claims experience.
For more information about moving insurance call (888) 893-8835. This article provides regulation highlights but should not be construed as complete information or legal advice.