Moving Insurance Simplified: What is Covered and Not

Decoding the Complexities of All-Risk Insurance Policies

Are you in the process of moving and searching for insurance options to protect your belongings during storage and moving? Navigating the complexities of insurance policies can be daunting, especially when it comes to understanding all-risk insurance. In this blog post, we will delve a little into some intricacies of “all-risk” insurance policies and providing you with some valuable insights to make an informed decision.

1. What is “all-risk” insurance?

2. Understanding the coverage (Covered risk and Excluded risk)

3. Limitation of coverage

What is All-Risk Insurance?

Marine Cargo insurance, or “all-risk” insurance is a comprehensive type of coverage that provides protection against a wide range of perils or risks. Unlike named peril policies that only cover specifically listed risks, all-risk insurance offers broader coverage. It safeguards your possessions from a variety of potential hazards, from fire and theft to accidental damage and natural disasters. Insurance policies issue to cover your items during moving and storage also falls under all-risk insurance.

Understanding the Coverage

While all-risk insurance offers comprehensive coverage, it's essential to understand what is included and excluded in the policy. Here are some key points to consider:

Covered Risks

An all-risk insurance policy typically covers:

• Fire and smoke damage (in storage)

• Theft and burglary (in storage)

• Water damage (excluding floods) (in storage)

• Accidental damage (during moving & transit)

• Natural disasters (e.g., earthquakes, hurricanes)

• Transportation accidents/ Hijacks

Excluded Risks

While all-risk insurance provides comprehensive coverage, certain risks are typically excluded. These exclusions vary between different insurance providers, but commonly include:

• Intentional damage caused by the policyholder

• Pre-existing damage

• Flood damage

• Pest infestations

• Wear and tear

• Mechanical & Electrical damage

• High or Extraordinary Value items

• Damage due to improper packing

• Damage during self-storage caused by improper maintenance

Limitation of Coverage: Common risk that you might think is covered, but is not

Here are some examples of common claims from customers that are excluded.

Electrical Damage (TV, stereo systems etc)

Basic insurance does not cover internal electrical components unless there are visible signs of external damage. A common example would be a TV set that is unable to be switched on after a move.

The above could be due to “Electrical derangement”, and it is usually not covered by insurance due to several reasons:

1. High Risk: Electrical issues can pose significant risks, including the potential for electrical fires, electrocution, and damage to property. Insurers may view these risks as high and may choose to exclude coverage to avoid potential large payouts.

2. Wear and Tear & Sensitivities of Parts: Electrical systems deteriorate over time due to wear and tear. Electrical derangement can also be easily triggered when it is subjected to slight vibrations and buffeting during transport. Many insurance policies are designed to cover sudden and accidental events rather than issues arising from gradual wear and tear.

So what should you do if your electronic item can’t be turn on after the move? Here are suggestions:

1. If your electronic item is a new set, the manufacturer’s warranty may get your parts replaced.

2. Get it repaired. It might just be due to an electronic component that have come loose and does not require any part replacement.

3. Some movers may compensate you out of good will. Discuss with your mover for this option.

Wear and Tear

One of the risk that is excluded during transportation is wear and tear which includes dents and scratches.

Here’s why they are not covered:

1. Predictability: Wear and tear damages, such as scratches, are generally considered to be predictable and often inevitable occurrences during the course of transporting goods. Insurance is primarily designed to cover unexpected and uncontrollable events, not the natural consequences of regular use or handling.

2. Preventability: In many cases, scratches and wear and tear are preventable through proper packaging, handling, and transportation procedures. Insurance companies may expect shippers and transporters to take reasonable steps to minimize these types of damages.

3. Evaluation Challenges: Determining the cause of scratches or wear and tear can be challenging. It's difficult to prove whether these damages occurred before or during transit. This can lead to disputes and fraudulent claims, making it challenging for insurers to accurately assess and settle claims related to wear and tear.

4. Cost: Including coverage for wear and tear in an all-risk policy could significantly increase the cost of insurance premiums since it occurs so frequently. It might not be cost-effective for insurers to provide coverage for damages that are expected to happen over time and can be managed through proper handling and packaging.

5. Functionality: Insurance is more likely to cover events that result in functional impairment. Scratches, while undesirable, usually don't render an item non-functional.

Therefore, it is important to find a mover that can provide proper packing and wrapping services. The additional cost in material and labor used for good packing is significantly less than the potential wear and tear on your precious belongings.

Conclusion

If you had made it this far but are still confused, here are simple key points to help you generally determine what is covered and what is not. Simply ask does the event have the following characteristics:

1. Unexpected and unplanned

2. Sudden and accidental

3. Causes loss of functionality

4. Causes of damage/loss easily evaluated

5. Caused by external factors

But remember, in getting an insurance policy, it is important to review the benefits, exclusions, limitations, terms and conclusion carefully to understand what you are covered for.

Disclaimer

The information provided in this blog post is intended for general informational purposes only. It is not intended to serve as insurance advice, or a substitute for professional consultation. While we strive to provide accurate and up-to-date information, the insurance landscape is complex and subject to change. Insurance policies, terms, and conditions can vary widely, and the specifics of your coverage may differ from what is discussed in this blog. This blog post does not establish a contract or agreement of any kind between the reader and any insurance company or entity. For personalized guidance, specific insurance advice, or to understand the terms of your insurance policy, it is recommended that you consult with a qualified insurance professional or your insurance provider directly. Use of this information is at your own risk, and we disclaim any liability arising from its use.