The following article was originally prepared as an address to the Annua Convention of the Household Goods Forwarders Association of America. While this subject might at first appear to have only limited appeal, it must be remembered that in the fiscal year 1974/75 about 450,000 individual household goods and baggage shipments were handled by the forwarding industry for the U.S. Department of Defence alone, producing a revenue of $450 million. Of this total, about 134,000 shipments with a revenue of $200 million moved in international trade. Moreover, the problems inherent in the insurance of HHG (household goods) shipments are in many ways quite similar to the problems faced by containerised shipments of general merchandise.

In the HHG shipping business, two separate marine insurance contracts are generally in use. One protects the HHG forwarder against the liabilities he assumes as an NVO (Non-vessel-owning common carrier) under the bill of lading issued by him or, in the case of military shipments, under the terms of the standard contract known as the Basic Military Tender. Even though the forwarder’s contract as a common carrier allows him certain exceptions, such as loss or damage caused by an Act of God, these exceptions are difficult to prove and his legal liability is therefore almost absolute. The liability insurance is consequently arranged on an “All Risks” basis. However, he and the underwriters protecting him under the liability policy are allowed to limit their liability to a certain extent, usually at either 30 cents or 60 cents per lb. net weight of the individual property lost or damaged.

Because of this limitation, the forwarder, through his insurance company, makes available to the owner of the HHG a supplementary policy, generally known as Declared Value coverage, which is a fully valued first party cargo insurance policy similar to the type of insurance generally arranged for a shipment of general merchandise. The owner takes out this extra insurance policy if he is not satisfied with the 30 cents or 60 cents per 1b. protection he would have automatically under the terms of the contract of carriage, and he pays a premium which is rated directly on the insured value he declares. This insurance likewise is on “All Risks” house-to-house terms, with minor exceptions such as ordinary wear and tear.

As with all other services, an insured will generally try to obtain the necessary insurance protection at the most economic cost. This can be achieved under either