Is moving insurance worth it?

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Holly JohnsonContributing WriterHolly Johnson is a former contributing writer at Policygenius, where she covered insurance and personal finance. Her writing has also appeared in Business Insider, CNN, U.S. News & World Report, Bankrate, and The Balance.

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Whether you're moving down the block or across the country, moving can be an expensive experience. But you don't want to add to the cost by having to replace any items that get stolen or damaged during the process and that's where moving insurance could come into play.

What are my options?

According to the Federal Motor Carrier Safety Administration (FMCSA), a devision of the Department of Transportation, the moving company you hire is liable for the value of the goods you ask them to transport. There are different types of liability, however, and the type of coverage you choose will play a role in how you’re reimbursed if your possessions are lost or damaged. It also affects what you pay for protection.

Full Value Protection is offered by movers at an additional cost. This coverage makes your mover liable for “the replacement value of lost or damaged goods in your entire shipment,” according to the FMCSA.

If any of your belongings are lost, destroyed or damaged while your mover is handling them, this coverage requires your mover do one of the following: repair the item, replace the item with a similar one, pay a cash settlement to repair the item or for the current market replacement value.

The big exception here is that movers can limit their liability for loss or damage for particularly valuable items such as an antique piece of furniture or rare vase. “An article of extraordinary value is any item whose value exceeds $100 per pound (such as jewelry, silverware, china, furs, antiques),” notes the FMCSA. They suggest you get your movers policy for these items in writing before you initiate the move.

Released Value Protection is coverage that is included in your move at no additional charge. While it’s a bonus to not have to pay for coverage, it’s important to note the protection offered is minimal. As the FMCSA notes, this coverage makes it possible for the mover to assume liability for no more than 60 cents per pound, per article.

While this level of coverage could be sufficient in some cases, the FMCSA notes that certain items, and particularly electronics or quality furnishings, could be vulnerable if you choose this coverage. They offer the example of a stereo system that weighs ten pounds but is valued at $1,000. Without additional moving insurance in place, your moving company would be on the hook for a maximum of $6. Let's not even imagine what a $6 stereo would look like.

Third-Party Coverage can be a good option if you go with the released value protection coverage. Once the mover covers the 60 cents per pound, per item, then this extra insurance can pick up the remainder (up to the amount you purchase). Before you buy any additional insurance, it's a good idea to check your homeowners insurance policy to see if you may have coverage there.

Note: Third-party coverage is optional insurance and these policies aren’t governed by federal law (but are regulated by state law).

What isn't covered by moving insurance

Just like you want to know what's covered, it's important to know what isn't. Anything a moving company doesn't pack is not covered. Coverage also doesn't typically extend to damage caused by natural disasters like fires, hurricanes, tornadoes or other extreme weather conditions. For more specifics about what isn't covered, it's a good idea to talk with your moving company or insurance provider.

How do I decide if I need moving insurance?

Just like with most other types of insurance, it may seem like a big investment, but you're happy to have it in the event something does happen and you need it.

But before you make the final decision, it's a good idea to have an understanding of how much you'll pay so you can make sure your moving budget can handle this.

Unfortunately, the amount of these policies is difficult to estimate because it really depends on the value and size of your move, where you live and what you own. This is where an inventory of your belongings can really come in handy — these home inventory apps can help you accomplish that. You can talk with your movers and your insurance company to help you establish the specifics.

Remember, you’ll also typically have a deductible to pay if you file a claim. While having a lower deductible means your policy will cost more up front, having a higher deductible means actually using your policy can become expensive. It's up to you on how you decide which version is right for you.

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