Typically, two types of insurance coverage are offered for household goods shipment – “total loss” and “all risk.”
Most shippers will take the “all risk” option, but it is important to understand the difference in coverage when making this delicision.
“Total Loss” is just that – it covers catastrophic losses like container / boat sinking, truck turning over, crane operator dropping the container at port and a hole poked in the container causing water damage.
It will not cover a broken plate or broken leg of a table.
“All Risk” will cover all the above plus things like a broken plate, etc. etc if “professionally packed.”
In short, all risks are covered. Based on the size of the deductible, your premium will go up or down.
You will declare the value of your goods and then payment is calculated based on the premium / deductible combination you choose.
Household goods policies “require” insuring the entire shipment.
If you have a claim, the insurance company will review your documents (packing list and valued inventory) and if they determine you were underinsured by some percentage.
As an example, if they said you had only insured 50% of your shipment, this would mean you had taken 50% of the risk on yourself.
Therefore if you had a $1000 claim, they would pay out $500 (50% of the claim) less the deductible.
In order to prevent this, you should also list and insure all goods in the shipment for a small amount.
Ie. $100 for clothing, $100 for shoes, etc, etc.
This would keep costs low, but more importantly prevent an “underinsurance” scenario.