Valuation Explained

Valuation is often confused with insurance and it is a difficult concept for people who are moving to understand. Even people in the transportation industry often don’t fully understand the distinction. “You broke it, you fix it” seems to be fair and in practice, and if you have chosen the right valuation option, that is exactly what happens. But it is important that you choose the right valuation option for you. Cassidy’s hopes that by providing an explanation of valuation, we can help make that choice easier.

The Unlimited Liability Scenario

Under English Common Law, carriers (by carriers we mean all who get paid to transport someone else’s things like trucking companies, railways, shipping lines, airlines…) have unlimited liability for the items in their care. This extends not only to the goods themselves but also any other cost that the shipper may have incurred as result of the loss (even temporary loss as in a late delivery) of the cargo.

For example, if the Post Office failed to deliver a letter that resulted in a company going bankrupt, the Post Office would have to pay the owners profits that company would have made forever. The wages of the employees from the bankrupt would have to be paid by the Post Office forever. The profits of other companies supplying goods to the bankrupt company would have to be paid by the Post office forever. The wages of the employees from other companies who no longer supply the bankrupt company would have to be paid by the Post Office forever. Companies buying the bankrupt companies goods would have the difference between what the used to pay and what they pay now paid by the Post Office forever. The Post Office would be liable for the future taxes and charitable donations of the bankrupt company forever, and it goes on and on; in short, unlimited liability. “You broke it, you fix it” seems fair until you look at the unlimited liability of the “you fix it” part.

The Transportation Act To The Rescue

As you can imagine, such a system would bring commerce, as we know it, to an end. No one in his or her right mind would dare transport anything for anyone else. The risks for someone who transports goods for someone else are just too high to be contemplated. Recognising this, governments around the world enacted legislation designed to “limit” the liability of the carriers.  These laws are necessary to limit the risk of transporting goods for other people. In Canada, it is the Transportation Act. For household furniture, this limit is set at $0.60 per pound per article.

The Transportation Act does provide for shippers who do not have alternate sources of insurance or are uncomfortable with the limit set in the Act. Prior to performing the job, the carrier is obligated to offer the shipper the opportunity to raise the limit of the liability the carrier will accept. This does not mean the carrier is accepting unlimited liability. Rather it gives the shipper the right to request the limit rise from $0.60 per pound per article to something that should repair or replace an article if the carrier damages it. The shipper has an opportunity to “declare” a value for his or her shipment and the carrier is free to accept that value as the new limit of liability and because it accepts more risk, charge accordingly or decline to transport that shipment.

To help people who are moving to protect their goods, movers offer replacement value protection. In household moving, we recognise $10.00 per pound per article as the average replacement cost. A shipment which weighs (or is estimated to weigh) 10,000 lbs should have a declared value of $100,000.00 meaning the carriers’ liability is limited to $100,0000.00 in the event of a total loss and in the event of damages, the carriers’ liability is limited to $10.00 per pound per article. This is an average used as an industry standard. Naturally, some shipments can be valued for less and some shipments should be valued for more. It is up to the customer to declare what value they want.

To ensure your household goods are protected, you will be offered three different valuation options to choose from:

Option One: Released Rate Liability

Basic coverage provided at no extra charge. This rate is set by the Transportation Act and is limited to $0.60 per pound per article. This option can be chosen if you have an alternate source of insurance or you wish to self insure against loss or damages.

Option Two: Replacement Value Protection

Enhanced protection for your belongings. Replacement value protection is based on a limited liability of $10.00 per pound per article. In most cases, this amount is adequate to repair or replace any damage that may occur during a move. It is the best option for ensuring your goods are protected while in transit.

Option Three: Items of Extraordinary Value

Sometimes you have items that are valued much higher than $10.00 per pound per article. Items of extraordinary value must be confirmed by written appraisal.

Make sure your goods are protected. Choose the valuation right for you. Cassidy’s is here to help if you have questions.

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