When supporting relocating employees with household goods shipments, one question that often arises is: How is the insurance valuation calculated? The answer can vary depending on your provider, your internal policies, and your assignee demographics, but there are generally two primary methods.
Two Common Valuation Methods
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As an example, at Bournes Relocation Solutions we offer two primary approaches to valuing household goods for insurance:
1. Valued Inventory Listing (VIL)
With this method, the relocating employee (assignee) completes a fully itemised inventory, assigning an individual value to each item. This gives the most accurate reflection of the shipment’s total value and allows for precise coverage.
2. Lump Sum Valuation
Alternatively, the total insured value is calculated based on volume, using a rate of £2,200 per cubic metre (cbm) (a standard set by our underwriter). This method simplifies the process and avoids the need for a full inventory.
Important Note: Regardless of the method used, any item with an individual value exceeding £1,500 must be declared separately on a High Value Item form. This is a requirement from our underwriters to ensure appropriate coverage.
Managing High Insurance Premiums: Valuation Caps
For large or high-value shipments, insurance premiums can become substantial. To manage this, many corporate clients choose to implement valuation caps.
Here are a few common structures:
Container-Based Cap
- 20ft container: 30cbm × £2,200 = £66,000
- 40ft container: 60cbm × £2,200 = £132,000
Flat Cap
- A set maximum value regardless of shipment size or family composition (e.g., £200,000)
Tiered Cap by Employee Level
- Tier 1: £100,000
- Tier 2: £150,000
- Tier 3: £200,000
These caps help manage corporate risk while still providing adequate coverage for most household shipments.
⚠️ Avoiding Common Pitfalls: Underinsurance & Overinsurance
One area we regularly advise on is how to avoid under- or over-insuring shipments.
- Underinsurance can leave significant gaps if items are lost or damaged.
- Overinsurance unnecessarily increases the premium cost.
Assignees sometimes underestimate the replacement value of their goods in the destination country or fail to update valuations to reflect recent purchases.
Importantly, if an insurance company determines that a shipment has been underinsured, they may apply what’s known as the “principle of average”, meaning any claim payout could be proportionately reduced based on the level of underinsurance. For example, if the declared value is only 50% of the true replacement value, a successful claim may only be paid out at 50% of the claimed amount. Clear guidance at the pre-move stage can help assignees avoid this risk and ensure they’re adequately covered.
Important Note on Listing Grouped Valuables
When itemising grouped belongings (e.g. “10 handbags totalling £1,000”), assignees should always ensure that any item with a significantly higher individual value is listed separately. Why does this matter? If no specific items are identified, insurers will assume all items in the group are of equal value when processing a claim. For example:
- If one handbag is worth £500, but the group is listed as “10 handbags totalling £1,000”, insurers will assign each bag a value of £100 (£1,000 ÷ 10), potentially underinsuring the more valuable item.
By listing the £500 handbag separately, the remaining £500 would be fairly divided across the remaining 9 bags (approx. £55.55 each), ensuring accurate cover.
Choosing the Right Valuation Method
We’re often asked which valuation method is best. The answer depends on a few key factors:
- Shipment volume
- Employee seniority
- Time constraints
- Complexity or uniqueness of items
For high-value or complex moves, a Valued Inventory Listing provides the greatest clarity and control.
For smaller or time-sensitive shipments, Lump Sum Valuation may offer a more streamlined and efficient solution.
We work closely with clients to help determine the most suitable option based on their policy goals, risk appetite, and the specific needs of each move.
Additional Considerations
While all clients must comply with our insurance terms and conditions, many organisations also apply their own internal restrictions. Common examples include:
- Exclusions for specific item types (e.g., musical instruments, white goods, or motorcycles)
- Coverage limits based on employee seniority
- Required declarations for unique or high-value items
Tailor to Your Risk Strategy
There’s a wide spectrum of approaches to valuing and insuring household goods shipments. That’s why we build flexibility into our process, so your coverage strategy aligns with your policies, budget, and employees' real needs.
💬 Need Help?
Our team is always happy to support internal reviews of your insurance policy or valuation framework for your employee household goods shipping programme. If you’d like guidance or examples tailored to your programme, we’re here to help.
