3 Reasons to Start Selling Valuation Coverage

Looking for a great source of additional revenue to help offset future claims? It’s time to start selling valuation coverage.

Paying claims is part of the game in the moving business. By offering Full Value Protection coverage to your customers, you can generate more revenue to help offset those costs.

But where do you start? How do you charge? And what changes will you need to make to your operations to increase revenue and avoid fraudulent claims? 

Here are three reasons to start selling valuation, plus practical tips to get started.

1. You’re already doing everything you can to protect your reputation

As a mover, you'll do everything you can to make things right in the event of a claim—even if it means going out of pocket. By offering Full Value Protection, you can go beyond the $0.60 per pound mandated minimum and provide more peace of mind for your customers. 

You’ll also get an important added layer of protection for your business.

The more valuation coverage you sell, the more you’ll have in reserve to pay claims with. With sufficient funds to cover any claims, you don’t have to worry about going out of pocket to make things right with customers.

Maintaining sufficient valuation reserves also lowers the risk of needing to file a claim on your cargo insurance, which could otherwise increase your premiums or, in the  worst case, result in losing your coverage altogether.

2. Pricing is straightforward

One of the biggest hurdles when it comes to selling valuation coverage? Knowing how to charge for it. But pricing your valuation coverage is a lot simpler than it sounds.

Calculate shipment value

The first step is to let the customer know you’ll be finding their minimum coverage amount. In other words, what is the shipment worth? Use the below formula to calculate the value of the shipment.

  ⚡Shipment value = weight of items X cost per pound

Depending on your market, your cost per pound will probably be between $5 and $6. So, if you have a customer who has 10,000 pounds of items at $6 per pound, that’s $60,000 in minimum coverage that you’ll be responsible for in the event that the shipment is a total loss.

Once you know the value of a customer’s shipment, there are two ways to price it.

Flat rate pricing

This is a tiered approach where you have varying coverage and deductible levels for the customer to choose from. In a way, it’s similar to car insurance. Once you know how much it’s worth, you can look at your pricing chart and easily find the right rate.

For example, you could have an option for up to $25K in coverage with a $0 deductible as option A, $250 deductible as B, and $500 deductible as option C.

Cost per $100 of declared value

With this approach, you use the same formula for calculating your shipment value and multiply that number by a set cost per $100 in declared value. Depending on the deductible level a customer chooses, the cost might land anywhere from $.90 to $1.20 per $100 of declared value:

⚡Price of coverage = value of shipment X cost per $100 of declared value

Let’s say you’ve got a $50K shipment (10,000 pound shipment at $5 per pound). If you charge $1 for every $100 of declared value, that’s a fee of $500 to cover that shipment.

This approach gives a more specific price for customers between two tiers. For example, if your first tier is $25K in coverage and your next tier is up to $50K in coverage, customers who want to declare $43,500 are technically paying for more coverage than they need.

At the end of the day, it’s up to you to decide which option will work best for your business. Customers willing to take on a higher deductible can reduce their coverage fee, no matter which type of pricing you offer.

Don’t let them go less

No matter which approach you choose, the “cover your a**” rule very much applies. Say, for example, you have a customer who has 10,000 pounds of items at $6 per pound, that’s $60,000 in minimum coverage. 

If they tell you they want to increase that amount to $100,000 in coverage because of their premium furniture, no problem. But what if they want to decrease their coverage because their items aren’t worth that much? This is a major red flag.

It's critical to collect the right amount of revenue in order to be able to cover any claims that arise. After all, you can’t cover a Ferrari with a Toyota Camry insurance policy just because the driver believes the worst that’ll happen is a fender bender. In the event of a total loss, you’ll be the one left holding the bag.

Use the language in your contract to specify that any high-value items (e.g., cash, collectibles, jewelry, or any other items that exceed $100 per pound in value) aren’t covered. Make sure you’re collecting the revenue you need to cover claims when they happen, and avoid letting customers declare less than their minimum shipment value.

3. The revenue is real

To maximize growth, it's crucial to effectively sell, accurately price, and consistently offer valuation coverage on every move. When done right, we’ve seen this approach result in a take rate of 35%-40% and a bump in topline revenue between 3-4%.

To reduce claims and generate more revenue from valuation sales,

• Know your current claims ratio to find out how much you're currently paying out in claims and adjust your strategies, ideally targeting less than 1% of revenue in claims.
• Identify which crews need more training as well as the types of claims coming from different crews.
• Thoroughly document pre-existing damage to furniture, household goods, and the house itself to avoid fraudulent claims.
• Turn on electronics to test them prior to shipping and ensure they work properly.
• When storing items, document every item and any pre-existing damage.
• Train your team to use floor, railing, and door protectors and wrap delicate items.
• Build partnerships with local repair companies to save money via repairs vs. full replacement
• Hire a third party relocation service company to handle specialty items like crating, washer/dryer connections, and other services your crew might not be trained to handle.
• Note and exclude items that were not packed by your crew from coverage.
• Pay a “Claims Free” bonus to your crew for completing a set number moves without a claim within a given time period (week, month, or year).

When it comes to turning valuation sales into revenue, team training is half the battle. Map out a system for understanding not only your claims ratio, but the specific types of claims coming through. Is your crew regularly scratching floors or gouging walls? 

By tracking the most frequent types of claims and teams responsible, you can focus your training and incentives to eliminate these issues. But this is where many movers get stuck.

We recently asked our private community of movers how many of them were actively incentivizing their teams for being claims-free. Here’s what we found:

• 56% don’t incentivize their movers to be claims-free
• 43% give bonuses on a weekly, monthly, or quarterly basis
• 1% give a bonus for every job that’s claim-free

No matter how you structure your incentives, make sure you and your team are prepared to do everything possible to minimize your claims ratio and get more out of every move.

Join our mission to help movers exceed 20% net profit

In the same way you profit from selling boxes and packing services, valuation coverage can provide a seamless additional income stream while elevating the experience for customers.

Learn more about how we’re helping movers generate 20% or more in net profit. Grab our guide to selling moving valuation coverage, or swing by our blog for more mover resources.