If you’re moving, it’s important to choose a reputable moving company. After all, you trust them to take care of your most fragile belongings, your valuable electronics and Grandma’s antique dresser. That’s a lot of trust.

But if you think they’ll automatically pay to replace your belongings if they’re damaged or destroyed in the move, think again.

Most of the time, movers aren’t fully liable.

Here’s the reality. Under standard terms, moving companies are often only liable for released value – no more than 60 cents per pound per article. This is a fact that’s always included in the initial move paperwork, and is often forgotten when a loss occurs. When there’s a claim, moving companies don’t like having to break the “released value” news, and customers sure don’t enjoy hearing it.

What if you have third party moving insurance?

That’s great! If you’ve taken the responsible step of purchasing third party moving insurance, your coverage goes beyond the standard released value. However, there are two more questions to answer: Did you purchase enough coverage? Do you know about the coinsurance clause?

Even if you have moving insurance, you can be penalized if you’re not insured for the full replacement value of a damaged item. In that scenario, the coinsurance clause may apply to your claim.

If you’re underinsured: 5 steps to calculate your loss

1. Start with the maximum amount your insurance will cover.

2. Divide that by what your valuables are really worth.

3. Got the answer? That’s your co-insurance factor.

4. Multiply that by the cost to repair or replace the damaged item.

5. Finally, subtract your deductible from that amount.

What you end up with is what your insurance company will pay.

Okay, so let’s make this real: Say you’ve got a camera valued at $10,000. But you only insured it for $5,000. While the movers are en route, they get rear-ended, and the camera (packed near the back of the van) is damaged. The cost to repair it is $1,000.

You might be thinking, “Great! I’m insured for $5,000, so all’s well.” Not so fast. Let’s do the math.

The amount of your coverage ($5,000) divided by the value of the camera ($10,000) is 0.5. That means the camera is underinsured by 50%.

The cost of damage ($1,000) multiplied by your co-insurance factor (0.5) is $500. Subtract your deductible from that (let’s say it’s $250), and you end up with $250. That’s what your policy will cover.

There are better ways to save money.

Most people who choose to underinsure their belongings do so based on an impulse to save money. But there are better ways. In the end, choosing the right plan is your best bet.

Be sure your moving insurance policy is sufficient. Get moving insurance here.