Valuation is basically the estimated value of a customer’s belongings. Valuation is often confused with insurance. Valuation is not the same thing as insurance, but they are similar.
Since the value of every truckload of goods hauled in America varies, the liability assumed by the trucking company hauling that load varies as well. Valuation allows the owner of the commodity that is being shipped to declare its value and that declared value is what the carrier or trucker is liable for if anything bad happens. Obviously, a truck load of new TVs has more value than a truckload of used mattresses and the liability accepted by the carrier will be larger for the TVs than for the mattresses.
The value of the commodity of household goods is handled the same way:
- The customer declares what type of coverage they desire (released aka 60⊄ per lb. or full value replacement aka FVR)
- The customer declares the value of their shipments (or uses a weight table)
- The carrier is liable for this declared value
- The carrier charges a regulated fee to the customer for coverage based on the type of valuation chosen and the declared value of the items shipped (valuation)
- All claims for damage or loss are settled by carrier whose authority is being used for the interstate transportation
There are two kinds of valuation; RELEASED (which is free) and FULL VALUE REPLACEMENT.
Released valuation uses a formula of .60 per pound to determine an average value for used household goods. Released valuation has no cost to the consumer; it is mandated by the Federal Government. The issue with released valuation is that the 60⊄ per pound matrix hasn’t been updated in 50 years. As a result, the cost of items has risen so far from 60⊄ that it is almost farcical to use it. For example, an Ethan Allen sofa with a replacement cost of almost $4,000 and that weighs 245 pounds is dropped during the move and damaged beyond repair. If the customer had taken released valuation, they would be reimbursed 245 lbs. x .60 /lb. or just $147.00. That is just a fraction its real value. No customer would be satisfied with that settlement.
The second type of valuation coverage is far more equitable. It is called Full Value Replacement valuation and as the name suggests, should an item be irreparably damaged or lost, the customer would be reimbursed for its full replacement cost today. Using that same example, the customer would be reimbursed the full $3,900 dollars to purchase a new sofa. Most Arpin of RI customers choose FVR valuation and by Federal law, it is the default valuation option for customers who fail to choose an option.
The isn’t an upper limit on what the customer can declare as their maximum FVP. However, most insurance companies that cover trucking companies limit their cargo values to $1,000,000. However, there is a minimum declared value that must be taken out. That minimum is based on a formula of $7.50 per pound of the shipment. For example, a shipment weighed 5,000 lbs., the minimum FVR amount that could be declared is $37,500. That is then rounded up to the next nearest $25,000 increment or $50,000. The customer can always declare a higher value than the $37,500; but not a lower one.
Full Value Replacement Protection valuation offers several different deductibles to give consumers more pricing options. The deductible choices range for $0 to $1,000 in $250 increments. As with similar products, the higher the deductible, the lower the cost.
Before the shipment is loaded, the driver will ask the customer to declare whether they want released or FVR valuation. If the customer chooses the free Released valuation of 60⊄ per pound, they will also have to sign a waiver section on the Bill of Lading formally declining FVR valuation coverage. If they choose FVR, they will have to declare both a maximum value and a deductible. Once the truck leaves the origin address, the valuation selections cannot be changed.