What is Valuation?

“Valuation” is the mechanism for assigning the value of goods in the care, custody or control of a mover or warehouseman. Valuation is backed up by traditional insurance, but it is not insurance, so it is not subject to regulation by state departments of insurance, nor it is subject to traditional insurance concepts.

Movers are authorized to provide valuation as part of the moving and/or storage services they provide. This authority is in the Federal/interstate regulations and in many state regulations. The authorization to provide valuation should also be in the insurance policies issued to moving & storage companies. Make sure that your cargo and warehouse policies allow for valuation.

For the most part, any level of valuation only covers goods for loss or damage resulting from negligence on the part of the mover or warehouseman; it is the concept of negligence that makes the mover legally liable for loss or damage. Valuation generally does not cover any loss or damage due to Acts of God, such as earthquakes, tornadoes, hurricanes, or floods.  Because these are also out of their control, movers are not generally held liable for loss or damage caused by riots, strikes, wars, terrorism, or civil commotion.

Types of Moving Valuation

There are typically three levels of moving valuation options offered by moving companies:

1. Released Value Protection

  • Description: This is the most basic coverage and is often included in the cost of your move at no extra charge.
  • Coverage: It offers minimal protection, reimbursing you at a rate of $1.00 per pound per item (minimum in NJ), regardless of the item’s actual value.
  • Best For: Those with items of low monetary value or who have additional insurance coverage.

2. Declared Value Protection

  • Description: This can be either on an Actual Cash Value basis (ACV), Replacement Cost or FullValue Protection basis (FVP). The value declared should be for the entire shipment-not just for high-valued items.  This is a more comprehensive option that requires an additional cost.
  • Coverage: For values declared on an Actual Cash Value basis, settlement of any claim for loss or damage will subtract a depreciation amount based on the age and/or use of the item. For values declared on a Replacement or Full Value Protection basis, settlement of any claim for loss or damage will be based on the amount necessary to replace a lost or damaged item.
    Regardless of the valuation option selected, settlement of any claim would normally be based on the lesser of the following:

a.  The amount necessary to repair an item;
b.  The amount necessary to replace or “cash out” the item; or
c.  The maximum valuation amount shown on the contract between the customer and the moving company.

  • Best For: Individuals moving valuable or irreplaceable items who want more robust protection.

3. Third-Party Insurance

  • Description: If you desire more coverage than what is offered by the moving company, you can purchase third-party moving insurance.
  • Coverage: This can be tailored to cover high-value items and offer protection beyond what is covered by full value protection.
  • Best For: Those with highly valuable or sentimental items, or those seeking extra peace of mind.  Also best for Moving Companies who wish to transfer the risk of increased valuation protection along with transferring the claim settlement correspondence with the shipper, which would be handled by the third party insurance provider.

Why must Valuation be Offered Given the fact that valuation will expose a moving & storage company to a greaterdegree of claim costs, why offer it at all? Why can’t all shipments move at the lowest released value?  Well, here arethe realities:

1.    Because the tariff or regulations that apply to your operation may require the offer of valuation. Review applicable regulations and understand how the valuation options must be explained and offered to your customers. Your salespeople need to be able to fully understand and explain the options to your customers. Proper explanation can be as important as proper paperwork.

2.    Because common law and practice encourage consumer choice. That is, if your customer is not given the option tochoose a higher degree of protection of their goods in a mover’s care, custody, or control, one generally cannot defend the limitation of liability to $0.60 or $1.00 per pound per article in case there is loss or damage.

3.    Because in the ultimate analysis, legal liability for loss or damage is what the judge says it is – regardless of what you intended or even what the paperwork states.

4.    Because by offering different valuation options your customers will know that you are a professional moving andstorage company and that your employees are fully trained in the safe handling of customer’s goods. Withsafe handing, the collected charges from valuation can exceed your claim costs.

Offering the Right Valuation Protection Options

THE VALUATION OFFER AND THE CUSTOMER’S CHOICE MUST BE CLEARLY INDICATED ON YOUR PAPERWORK!  Ifyou cannot demonstrate that the offer was clearly made and your customer’s choice was clearly shown on the documents,in most cases you could be liable for the full value of any lost or damaged items.  Regardless of the valuation option chosen, each claim situation will present different challenges and a high degree of understanding of the valuation and claim process. The mover must contemplate both the simple and complex claim situations to determine what they will charge for the Declared Value coverage option when the charges are not specified in their tariff.  When deciding which level of valuation to offer, consider the following factors:

Inventory and Value Assessment
Require a detailed inventory of Shippers belongings with values. This will help shipper understand the potential financial impact of any damage or loss and guide decision on the level of protection needed.

Risk Tolerance
Evaluate shippers comfort level with risk. If the thought of losing or damaging expensive items causes significant concern, opting for full value protection or third-party insurance might be the best choice.

Cost vs. Coverage
Balance the cost of the protection with the coverage offered. While full value protection and third-party insurance come at an additional cost, they may be worth the investment for the peace of mind they provide.

Special Items
Consider any items that might require special attention, such as antiques, electronics, or artwork. These items often have higher replacement costs and may benefit from enhanced coverage.

Moving Company Reputation
Research the moving company’s track record and customer reviews. A reputable company with a history of careful handling and good customer service may reduce the likelihood of needing extensive coverage.

Final Thoughts

Offering the appropriate moving valuation is a critical step in the moving process.  Beyond promoting the appropriate selection of coverage for shippers in most transparent format possible, valuation coverage charges can be a profit making part of your business.  Of course, the lower your loss or damage are, the more profit you will see from valuation charges.  Conversely, some movers choose to steer all shippers to third party insurance in lieu of selling  “Declared Value Protection/Full Value Protection” options to limit insurance claims experience as well as eliminate the claims settlement process with Shippers.  Regardless, it is important to develop a valuation strategy and ensure employees are properly and continually trained on the valuation offer strategy along with packing and safe handling training to minimize damage.

For more moving tips and resources, stay tuned to our blog or contact us for personalized advice.

Blog Submission: Mike Egan, The Selzer Co. &  NJWMA Secretary.

If you have any questions or concerns about your next move, you can contact New Jersey Warehouse and Movers Association – njmovers.com


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