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My cousin is moving back to his home country and he is shipping all his stuff via international shippers. And they provide two types of insurances. They are as follows:

  1. All Risk Insurance: Your shipment is covered against risks such as breakage, damage, theft, fire, earthquake, collision, accidents, etc. if it is packed by our crew. But, packed by owner items (PBO) are not covered for damages/breakages & loss of items within the concealed boxes. The premium for this is 2.5% of the declared shipment value with $75 minimum premium & $250 deductible.

  2. Total Loss insurance: You would be entitled to the full insured amount minus the deductible, only in the event your entire shipment is lost. The premium for this is 2% of the declared shipment value with $75 minimum premium & $250 deductible.

Note that, in the first type of insurance, they said the items which are packed by their crew are the only ones covered.

In our case, he packed all his stuff by himself. I suggested him to take the second type of insurance but I am not sure if it is right. That is why I am here to ask if anyone has a better understanding of these insurances and which one would be wise to take?

Any help/advice would be hugely appreciated.

Thanks

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    TLI (2%) is cheaper than ARI (2.5%) while giving better coverage. Unless you made a mistake, I don't see any debate. TLI seems obviously better. – RonJohn Sep 16 at 20:57
  • Cool :) That's what I thought. Thanks :) – ShellZero Sep 16 at 21:35
  • Since it's obviously better, make sure to read the fine print for some hidden reason why it's cheaper. – RonJohn Sep 16 at 21:41
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    @RonJohn From what I read, I would expect the second insurance to cover only "total loss": they would pay if the items do not arrive at destination or are destroyed. The first one probably covers items broken or damaged during transport (which is why the insurer would want to package them: to ensure that they are properly protected and that the items are not broken to begin with). The proper answer will differ based on the nature of the goods and the risks inherent to such a move. – SJuan76 Sep 16 at 21:43
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    @SJuan76 In particular, the clause "only in the event your entire shipment is lost" suggests (to my perhaps cynical mind) that if you shipped 10 crates/boxes, and nine were lost but one made it through, you wouldn't be able to claim because the entire shipment had not been lost. – TripeHound Sep 17 at 7:02
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It depends on what hazards you are anticipating. You have to play this guessing game, as realistically nobody offers an "everything" insurance.

#1 will still protect you from improper handling of boxes by the crew. It might possibly offer all the benefits of #2, depending on the fine print: If the entire shipment is lost, you might be able to argue that it would have been lost regardless of how you packed it. One easy option is to unpack everything and make them pack it so you can use the insurance - it might seem wasteful, but in theory their staff is better at packing and the same insurance would have been much more costly if they covered customer-packed goods.

#2 applies to you as is, but only works if the whole shipment is lost - so for example if the plane crashes or the boat sinks. A cynic might observe that you could have 100k of your items stolen, and so long as they leave a single pen behind, you are ineligible for the insurance payout.

The best option for these is typically to get DIY insurance by simply budgeting to replace broken items. Another trick is to send things in separate shipments, this way any catastrophes will only destroy 1/3, 1/4 or 1/5th of your belongings - and if all the shipments are lost, you can probably sue them for negligence.

  • Great answer. Thanks a lot. Really helps :) – ShellZero Sep 18 at 17:20

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