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By Susanne Sclafane
Hauling sofas, dining room tables, refrigerators and collectibles may not seem like the path
to developing an online insurance service, but it was the first step for one entrant to the
inland marine insurance arena.
Gadi Binness, president and chief executive officer of MovingInsurance.com, has combined
experience in the moving industry and marketing with an interest in the Internet to create an
online insurance broker.
"I started in the moving business in 1986 as a mover and went up the ranks," Mr. Binness
said, going on to describe career moves that included the management of a New York City
moving company, Shleppers Moving and Storage, as well as a management position with
Moving.com, a relocation Web site.
"All the time, I wondered, 'How can I take what I know about the moving business onto the
Internet?' And one idea that keep running through my mind was insurance," he said.
Part of what prompted him to get property-casualty producer licenses in several states was
the business potential, he said. He cited statistics from the American Moving and Storage
Association indicating that there are more than 18 million moves in the United States each
year, with residential moves accounting for about 35 percent.
MovingInsurance.com, launched in January, allows people who are moving"shippers" as
Mr. Binness calls them to buy insurance online to cover household goods items being
moved. (It does not cover moving companies.)
There are several advantages to online placement, he said, highlighting the fact that the
Internet hub brings together consumers, moving companies and insurers on a single
platform, making it more than a customer convenience.
For consumers, there's one less headache involved in dealing with a stressful life event,
with the online broker allowing 24/7 access.
For affiliated movers, who allow MovingInsurance.com to put links and banners on their
Web sites for a fee, there is a new source of revenue.
And for insurers, the process has online policy-tracking efficiencies and real-time loss
information.
"In my view, that's the best tool in our system," Mr. Binness said, referring to a loss history
calculator which collects premium and claims data by mover. "We cap our loss ratio allowed
at 45. If a moving company goes past that, we have the option to cut them from the
program," he said, noting that insurers placing this insurance offline would have to wait
days or weeks for brokers to deliver such reports, delaying the underwriting action.
Turning to consumer benefits, Mr. Binness described the typical process shippers use to
protect their possessions. He noted that moving companies are legally subject only to
minimum liability amounts of 30 cents per pound per item for local moves (or 60 cents for
interstate). "The moving companies, because they are not licensed insurance brokers [and]
cannot really sell insurance, instead sell something called valuation" for customers who
want protection beyond the minimums, he said.
Valuation is actually a term for a charge embedded in the mover's tariff or rate schedule,
usually something like $5 per each $1,000 value, he said, noting that movers sometimes
refer to valuation with terms such as extended protection program or coverage. All three
terms typically describe a limited amount of coverage available based on weight or declared
value.
Valuation may not be enough, especially for consumers with high-value items, Mr. Binness
said, noting that limits typically stop at $20,000 or $30,000.
By contrast, MovingInsurance.com offers coverage up to $500,000, he said. The
MovingInsurance.com insurance is also all-risk insurance, which unlike valuation protects
against flood, tornado or other acts of God.
This is a one-time policy for one event, he said, distinguishing it from coverage that might
be available from a homeowners policy. (See related sidebar.)
Not all homeowners policies cover goods while they are in the care, custody and control of
the moving company, he said, noting that his personal homeowners policy covers furniture
but not breakable items while they're being moved.
"Even if homeowners does cover a move, we suggest that the shipper buy the insurance
from us," he said, highlighting the fact that a one-time moving claim could push up
homeowners premiums if filed under the homeowners policy.
MovingInsurance.com offers three policies: valued inventory, replacement value and actual
cash value.
"The best coverage for the consumer is the valued inventory," Mr. Binness said, noting that
when consumers complete the online insurance application they are asked to fill in an
itemized list of goods they want to cover. "We cover them 100 percent for each item minus
whatever deductible applies."
Under the replacement value option, the shipper provides one number say $10,000
coverage for the entire value of the shipment, "and then we suggest that they itemize the
high-value items, he said, adding that high-value items is defined as those worth $500 and
above. (Customers who don't know or don't want to figure out an overall value are given the
option to set the value at $8 per pound.)
Mr. Binness explained why this isn't the best coverage by example. "If they indicated
$10,000 of declared value and they have 100 items, [then] in settling a loss to a single item,
we will divide the number of items by the total coverage and we'll consider that item to be
that price. All the items get equal value," except for the high-value items, he said.
The last policy, actual cash value, is a depreciated value option.
There are deductibles levels to each of these policies of $250, $500 or $750.
While all three policies rely on customers to provide values, in case of a claim, they will be
asked for proofs of value, evidenced either by appraisals, receipts, or they if don't have
receipts, any price in a catalog for specific items, Mr. Binness said.
In addition to the three basic policies, MovingInsurance.com offers policy extensions
including storage (purchased monthly if storage extends beyond the 90 days automatically
included in the basic policy), auto shipping, and pairs and sets. Mr. Binness explained that
the pair and sets extension could be used, for example, to replace an entire china set in the
event that one item is damaged.
Policy exclusions include jewelry, historical certificates and any items that are packed by
the customer. "If any breakable items are packed in a box and the box itself is not
damaged, yet the items inside are, then we would assume [it was] because of improper
packing by the customer," he said.
"We also require that the shipment, at all times, be handled by a professional moving
company. So we cannot provide insurance for self-movers who move themselves with
rented trucks," he said.
MovingInsurance.com has an affiliated network of moving companies that are pre-registered
and pre-screened, he said. While only 20 companies out of roughly 10,000 in the
United States are currently in the network, he said the firm is targeting 100 by the end of
this year.
"If a consumer comes to our site and wants to use a mover not in our network, we will allow
them to purchase a one-time policy, after we check the moving company. If we find it to be
unsatisfactory [relative] to our standards, the coverage will be denied."
Currently, the only insurer providing coverage through MovingInsurance.com is American
International Group. In February, MovingInsurance.com announced an agreement with Inter
Trans Insurance Services Inc., an Irvine, Calif.-based managing general agent for AIG.
"We're looking to add one or two other underwriters in the future," Mr. Binness said.
Mr. Binness reported that the site has 5,000 unique visitors on a monthly basis and that
roughly 300 policies are issued monthly. "But it's early; we just started," he said, adding that
the official moving season extends from May through September.
Doesn't A Homeowners Policy Cover Household Items
When They Are Being Moved?
It's a logical question that may occur to anyone who is not a coverage expert reading the
accompanying article about online moving insurance.
The answer is sometimes, according to our own coverage experts, the editors of The FC&S
Bulletins, published by the National Underwriter Company in Erlanger, Ky.
Bruce J. Hillman, editorial director, Risk and Insurance Markets, cited the applicable
homeowners policy language:
"We cover personal property owned or used by an insured while it is anywhere in the
world…Our limit of liability for personal property usually located at an insured's residence is
10 percent of the limit of liability…or $1,000, whichever is greater. Personal property in a
newly acquired principal residence is not subject to this limitation for the 30 days from the
time you begin to move the property there."
But while that language suggests that there is 30 days worth of coverage under a standard
homeowners or tenants policy, Diane Richardson, assistant editor, pointed out that "for
most of us, coverage for contents is on a named-peril basis," rather than all-risks basis.
So "if the mover drops something fragile, since 'breakage' is not a named peril, there is no
coverage," she said. "If the moving van breaks down and the driver unloads items in the
middle of a rainstorm so that furniture and clothing becomes wet and moldy, possibly the
peril of 'vehicles' would apply, but this is a stretch."
Some homeowners forms (in New York State, for example) exclude coverage for theft of
personal property away from the residence premises, she said. So if the property was
sitting in a warehouse awaiting a final move and it was stolen, there would be no coverage,
Ms. Richardson said.
Moving Is Stressful, But Not That Stressful
Putting an Urban Legend To Rest
Anyone who researches facts about moving long enough will repeatedly come across the
untrue assertion that moving is the third most stressful life event right up there behind
dealing with death and going through a divorce.
The information is "sort of an urban legend," said Anita Brienza, communications consultant
for the Employee Relocation Council in Burtonsville, Md. The third-place ranking is widely
attributed to the ERC, which didn't produce any such listing, she said, noting that while
psychiatrists did do a study on this many years ago, "it wasn't that high on the list."
Indeed, Ms. Brienza supplied a copy of the Holmes-Rahe stress evaluation, developed in
the 1960s, noting that the closest events to moving that appear on the list major business
adjustment and major change in living condition are "pretty far down." The category "major
change in living condition," which includes buying a new home, actually comes in at number
30.
(Death of spouse and divorce, by the way, actually do top the scale. Marital separation from
a mate ranks in third place, followed by jail time.)
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