An opinion by Steve Huggins of AIM (Association of Independent Movers)
In the UK removals industry, the majority of movers offer removals insurance as an option. The standard practice is to inform the customer that the alternative to removals insurance is a limited liability of (usually) £40 per item. This can often be enough to convince the customer that removals insurance is worth having. This system has worked well for a long time, but it may be ready for change.
In the July issue of The Mover, Joe Warren offers up the question, "Is £40 enough?" in which he considers the effectiveness of limited liability as fair compensation. The article also explores the effectiveness of limited liability. It is hard to imagine a customer being satisfied with a payout of £40, or even £140 as compensation for the loss of an item worth over £500, but such items are commonplace on removal jobs.
The probability of expensive and time-consuming lawsuits is likely to grow as the difference between the value of household items and the amount offered under limited liability increases. So, what are the options?
The first option is to increase the figure from £40 to something more realistic. Let's assume we doubled it to £80. Apart from the inevitable increase in insurance premiums (ask your broker), this would do little to reduce potential lawsuits. When commonplace items like game consoles and 40-inch TVs cost hundreds of pounds, very few customers would be satisfied with £80 per item.
Probably the biggest argument against increasing from £40 per item is the issue of proportionality. The cost of a local UK move hasn’t changed much in the last 15 years, so if the increase was proportional it would likely be only a couple of pounds. Though this would be proportionate to the income of the mover, it would be incredibly disproportionate to the average value of household goods.
The second option is to make removals insurance mandatory on all jobs. One reasonable argument against this idea is that there are customers that are willing to forego full insurance to keep the costs down, and someone needs to provide a service to those customers.
If several small movers are competing for the same customer, then a cheaper option might help to secure the job. The problem of competing on price has always plagued the industry and there are many opinions on the subject, but we should consider the implications.
If a job is secured on the basis that the price is low and with only limited liability, but the customer takes action because they were only offered £40 for £250 of damage, was the job worth taking? Even if they fail to win in court, the reputational damage on social media and review sites could be devastating.
AIM has no plan to change the membership criteria to insist members provide full insurance on all moves, but we do think it is a conversation that we need to have, not just among our members, but throughout the UK removals industry. For an alternative view see Peter Gower’s story.