I was talking with a new client two weeks ago. We’d just completed the insurance on the new home they’re buying and they were finalizing everything for their move to Dallas. The client had one last question about his new policy. He’d met with the moving company earlier and wanted to know whether or not the home policy we’d written for them would cover their property during the move or should he buy the movers insurance?
This is an excellent question that pops up several times a year. It’s usually asked by someone who’s working through a move to the Dallas / Fort Worth area and they want to confirm their personal property is covered. In order to answer this question, there are two categories of questions that must be answered. The first category we review involves timing, what’s covered when, while the second deals with the issue of policy coverage. With that in mind, let’s delve into these two areas.
Timing: There are two timing issues I discuss with any client who’s deciding whether or not to purchase movers insurance and they are:
- When does the old or current policy end?
- When does the new one begin?
Their contents could conceivably be covered under their old or current policy if they have moved out of current home and will be in transit to their new home prior to the closing of their existing home. In this case, review the policy language with your current agent to determine if personal property will be covered while in transit.
If the client will not be in transit until after the sale of their existing home, then their original policy will not cover their property because the home is no longer theirs. This follows the rule of property insurance referred to as insurable interest. The home they’ve vacated is no longer theirs therefore they have no insurable interest in that home.
When does the new policy start in relation to their move? If the new policy starts prior to the family being in transit here, then the new policy could conceivably cover their personal property even if they haven’t moved here yet. In these cases, I always review with an underwriter if the property is covered while in transit and what specifically is covered.
If the new policy doesn’t start until after the moving van has arrived, then the new policy will not cover their personal property until its start date. In these cases, buy the movers insurance.
Policy Coverage: The policy language used is critical to determine what’s covered and what’s not. Here too, there are two areas that need to be understood; how is premises defined and what’s considered on versus off premises.
- Premises is usually defined as the home or dwelling itself. The carriers I work with that cover personal property while in transit broaden that definition to include the moving truck. In these cases, the personal property is covered up to the full value of policy limits should it be damaged while in transit. That usually applies to damage of personal property due to a wreck, fire, etc.
- The few carriers I work with which don’t cover personal property in transit, consider the personal property to be off premises from the new or primary home. In these cases, they may not cover the personal property at all, or they may restrict the coverage to the off premises limit which is usually 10% of the total personal property amount.
In addition to these two issues, there’s one other language issue that must be answered; what type of loss is covered? In the first example, the insurance company may cover the personal property should the moving truck catch on fire or be involved in a wreck however, they may not cover breakage. Breakage usually refers to a mover dropping an item and it breaking or it’s damaged because it was packed poorly.
If breakage is not covered and that’s a concern with a new client, I immediately discuss the quality of furniture and other items such as dishes, glassware, and artwork. If the family owns upper end furniture and accessories, then I recommend they purchase movers insurance. Some moving companies sell “insurance coverage” based on gross poundage while others sell coverage that more closely resembles a home owner’s policy. While the “nicer” coverage is more expensive, it does cover specific items such as antique pieces, nice glassware, artwork, and musical instruments such as a piano in the way they should be covered.
I worked through each of these areas with my new client. We confirmed their personal property would be covered while in transit for damage arising from a wreck, fire, etc. but not for breakage. Once my client understood that, they made the decision to not purchase the movers insurance. They’re on their way to their new home now and will arrive in time to start the new school year! It’s an exciting time for this family and with the information I provided they were able to make the right decision for them.
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