Your household goods and personal belongings represent many years of financial and emotional investment for your entire family. Wherever you are living around the world, your house is not your home without them. Yet, moving these possessions from one country to another can expose them to considerable risk.
Damage and loss can occur as a result of any number of possible scenarios at every stage of the journey. Statistics show that on average, the physical process of moving results in one damage or loss claim for every four relocations, although the more experienced specialists in international moving often have a much better claims record of one in every 10 or more relocations. With more complicated and often longer journeys, international transfers increase the odds.
What action can you take to protect yourself?
It Can Happen Anywhere
Expatriates generally ship their goods by land, sea, or air-depending on company policy and the actual destination. The more complex the journey, the greater the risk. Just consider these recent examples:
- 270 containers were lost overboard, with another 550 damaged during a fierce storm.
- A container train derailed and overturned, causing major damage.
- A container was stolen from the dockyard in London, its contents stripped.
- A container was damaged during transit; subsequently, water entering the container badly damaged the contents.
Perhaps these incidents may sound dramatic, but they can and do occur.
More commonplace are the minor damages that can take place during transit. Considering the many fragile and delicate items in a household-and the long, grueling journeys required to transport that household to its new home across the globe-it is not surprising that some items may need attention when they finally reach their destination. Regardless of how well they were protected during the shipping process, some goods may suffer damage.
The good news is that comprehensive, all-risk insurance provides coverage against these hazards, large or small. You should always consider this type of insurance-anything else is false economy.
Setting the Correct Value
To determine the appropriate amount of insurance coverage, you must not only understand the potential for risk, but you must also be able to accurately estimate the value of your household possessions.
Valuation is the most important consideration in defining adequate coverage. In other words, insurance protection is based on your accurate assessment of the value of your household goods, established long before the family goes abroad.
An itemized "valued" inventory is necessary to ensure that, in the event of a claim, the appropriate amount can be paid in settlement. In addition, this inventory and the type of policy you choose form the basis on which premiums are assessed. In some assignment locations, where the risk to personal property is great because of civil disturbances or natural disasters, it is useful to update the inventory on a regular basis to keep current records of your household goods.
Completing the insurance application with detailed valuations is time-consuming and complicated. Don't rush this vitally important task. Allow yourself enough time. Be thorough with the valuation, and be specific. Keep in mind that items not declared are not insured.
Insurance: Under, Over, None
Remember, the value that you declare is the maximum value that the insurance carrier will place on your possessions. Many people underestimate the value of their goods and do not consider replacement cost at their destination.
For example, if you insure an item for $500, and it is lost in transit, the maximum settlement for that item will be $500-even if it costs $800 to replace the article in your assignment location. To address this situation, the carrier typically provides information related to relative costs throughout the world.
On the other hand, be careful not to over-insure your household goods. If the carrier can replace an item for less than the insured value, it may do so.
One final point to remember is that transit insurance policies, like all home and automobile policies, contain exclusions. It is important that you read the provisions of your policy and be aware of the exclusions. Ask questions when you do not understand the policy or need clarification. (See sidebar, "Pertinent Questions Before Buying Insurance.")
The Practical Approach
Although the chances of your goods arriving without major mishap are excellent overall, the risk of damage or loss is certainly real. Don't dismiss the need for common sense protection-particularly when it comes to the familiar possessions that will make your new foreign residence feel a little more like home.
Colin Gordon is director of quality assurance for TheMIGroup. For more information, go to http://www.themigroup.com.
This article first appeared in Organization Resources Counselors, Inc.'s Expatriate Observer.
Sidebar: "Pertinent Questions Before Buying Insurance"
- Does my employer pay for any moving insurance? If so, what is the coverage? What are the restrictions?
- Is there any advantage to receiving reimbursement valued at point of origin or destination?
- Are my possessions easily replaceable? Do I have valuable items that might do better to remain locked away at home?
- What situations or items are excluded?
- What is the minimum value above which items must be listed separately?
- Is the physical relocation a complicated affair?
- What legal liabilities, if any, do various carriers have if I do not insure my possessions?
- Is there a deductible, below which the carrier will not reimburse any damage or loss? If so, how much? Does this amount change by item value?
- If I fail to insure for the full replacement value of goods, can I recover a portion of the loss?
- How are claims handled? Must I go through the employer or can I deal directly with the carrier? How fast must I submit the claim? What information will be necessary for the claim application? How long does it take for a claim to be settled?
Source: TheMIGroup
