Moving house?

Do you need to buy separate moving insurance when you're moving house?

A Consumer member found out the hard way that it pays to check your contents insurance policy before you move house. He was moving from Lower Hutt to Paraparaumu and was alarmed to find that out of the removal company’s total bill of more than $5000, $1800 was for insurance.

This experience isn’t unusual. Removal companies provide insurance based on the insured value of the goods, which can be a large proportion of the costs if you’re having expensive items moved a short distance.

Why you need insurance

You’re not covered by the Consumer Guarantees Act (CGA) if your goods are damaged (or lost) in transit by the removal company, but you are covered for poor packing, failure to turn up and late delivery.

And while there’s some limited cover (up to $1500 for each unit of goods) under the Carriage of Goods Act, removal companies can contract out of this – which they often do. Simply signing the contract forms from your removal company usually means you’ve waived your rights to compensation for damage.

We’ve argued for a long time that this gap in the Consumer Guarantees Act should be plugged. We made the point again in our submission on the Ministry of Consumer Affairs’ proposed changes to consumer law. Bringing removal companies under the CGA would eliminate the need for expensive moving insurance.

What you can do

Insurance companies
Most house and contents policies don't cover goods being moved outside of your house. But some comprehensive contents policies include limited cover for this: AMI’s and State’s include some moving cover; and Vero through its ANZ and National Bank policies offers it as a policy extra.

There are also special "transit" policies available from some companies which are bought separately from contents policies. Check with your insurance company.

Removal companies
Removal companies offer two types of insurance. “Total loss” policies cover major disasters such as fire, theft, collision or overturning of the removal vehicle, and other deliberate acts or riots. The entire consignment has to be lost before any payment is made.

Most companies also have a more comprehensive "accidental loss and damage" policy. This covers total loss, plus loss or damage to individual items that usually must have been packed and moved by the company. Cover includes breakage, scratching, denting, chipping, marking or tearing.

Price comparison

We asked for quotes from several moving companies and insurers for "accidental loss and damage" policies for moving household goods insured for $60,000 from Lower Hutt to Paraparaumu.

Quotes varied by over $400 and were lower than our member's, but showed no consistent pattern of whether it’s cheaper to buy direct from an insurer or from a removal company. While there are some cheaper policies available from insurance companies it's possible to buy directly from the removal company at a competitive price.

Each situation is different and the quote you get will depend on factors such as the items being moved, the experience of the removal company and the distance the items are being moved. Some companies may consider a move from Lower Hutt to Paraparaumu as within city limits while others may not.

Guide to the table
Premiums were provided by companies who agreed to participate in our research. Quotes are as at October 2010 and include GST. (a) = taken from a quote in July, adjusted for the new GST rate.

Tips

• You can save money on moving insurance by taking a higher excess. For example, the premium for Westpac's Transit policy for $60,000 cover drops from $866 ($250 excess) to $466 ($1000 excess). The standard excess on these types of policies is usually $250.
• See if your company is prepared to match cheaper premium quotes and if necessary negotiate.
• Make sure goods are suitably packed. It may pay to use the removal company for packing – some policies won’t pay out if goods are insufficiently packed. Ezimove, for example, has a standard excess of $100 for professionally packed goods and $500 for owner-packed.
• Check the policy document carefully for what’s covered, and whether the cover is indemnity or replacement value. Replacement cover is best if you can get it at a reasonable price.