Is moving insurance worth it?

As all your earthly belongings are packed onto a large moving truck, one question is likely flitting around your mind: Is all that stuff going to be okay? 

The answer is probably, especially if you’ve hired a reputable moving company. But accidents do happen. Around 20 percent of moves lead to some damage — anything from broken plates to scratched furniture to whatever is happening here. 

Mishaps arise often enough that many are left wondering if they need moving insurance? Is it worth it to plunk down a few extra dollars for peace of mind when it comes to your belongings and household goods? 

The good news is, if you’re moving to another state, you don’t necessarily need to buy an insurance policy. Basic coverage is included with the price of your move. 

Federal law requires moving companies to offer two kinds of protection for your stuff. (Although they don’t call it insurance for complicated legal reasons, and these policies are actually governed by The Federal Motor Carrier Safety Administration.) Instead it’s known as “valuation coverage.” 

For all intents and purposes, valuation coverage works the same way as insurance. It will cover items on interstate moves if they’re smashed or dinged on the way to your new home, providing some sort of reimbursement.

The exact type of reimbursement is down to the type of coverage you elect to get. 

The basic coverage that comes at no additional cost with the move is called “released value protection.” It will pay you no more than 60 cents per pound for damaged items. 

And yes, you read that right. Released value protection is calculated by weight, not by the actual value of the item. 

Say, for example, your 10-pound, $1,000 stereo was damaged during the move. With released value protection, the moving company would pay out $6 in compensation — barely enough to buy a used CD. 

To opt for this coverage, you must sign a specific statement on the bill of lading agreeing to it. 

If you don’t opt into released value protection, your shipment will automatically be covered under the second of the two coverage options a moving company offers. It’s known as “full value protection,” and as the name suggests, it’s a more robust form of coverage than released value protection. 

Full value protection is closer to the kinds of insurance coverage you probably have in other parts of your life, such as homeowners or auto insurance. Basically, this kind of coverage will provide the replacement value of any items lost, damaged or destroyed during the move. 

If something does go wrong and, for example, one of your dining room chairs gets smashed, the moving company has three ways to make good. They can repair the item, replace it with a similar item, or make a cash settlement for the cost of the repair or the current market replacement value

Just know that this kind of coverage often has an exclusion for so-called items of extraordinary value. Basically these are things that have a market value that exceeds $100 per pound, such as fancy jewelry, antiques, china or that stack of 1960s comic books. Pricey items like these have to be specifically listed on the shipping documents, and may be subject to an additional charge to cover. 

The catch with full value protection in general is that it’s not automatically included in the price of your move. It will cost extra. How much will depend on the moving company and what you’re moving, but it’s generally in the neighborhood of 1 percent of the declared value of your stuff. 

Be aware that these policies often come with deductibles. Also know that there are factors that could void or lower your coverage. If you pack your own boxes, the moving company may not be liable if the stuff inside gets damaged. The liability coverage could also be voided in the face of natural disasters. If a hurricane sweeps away your moving truck, you may be looking at a total loss. 

But what’s offered by the moving company isn’t the end of your insurance options. You could also opt to buy third-party moving insurance from a specialized insurance provider like this one. Many of the well-known, generalized insurance companies also offer a moving insurance policy, including State Farm and Allstate. 

Depending on the level of coverage you pay for, this additional coverage could bridge the gap between the basic released value protection offered for free by the moving company and what you might need to actually cover the cost of any lost or damaged belongings. The insurance cost will of course depend on the value of your items, whether you’re covering any high-value items, the particular insurer and whether you’re looking to get the full replacement value for anything lost or damaged. 

With so many types of moving insurance, the question is, is it worth it to pay extra for more comprehensive coverage? Unfortunately, only you can answer that. The first step is to make an honest assessment of your belongings. Survey everything you’re packing onto the moving truck and calculate the rough value of your belongings. If you aren’t transporting a lot of valuable items and your furniture is not particularly pristine, released value protection could be the way to go. It might not be worth paying the extra insurance cost for additional policies, especially when you consider that moving mishaps aren’t all that common, and your stuff is likely to make it to your destination safely. 

One final point: All of this hand-wringing about what insurance covers and what it doesn’t might be moot. You may not have to do a deeper dive into moving insurance because your existing renters insurance policy or homeowners insurance policy may just cover your stuff during a move. Check on your individual policy.