Uprooting and moving: What are the insurance implications?

By Michael Giusti

Summer is traditionally moving season in the United States, and that has insurance implications both for the people uprooting their lives, and for the insurance companies serving them.

Moving is down overall from prepandemic highs driven largely by a housing inventory that has not keept pace with population growth following the housing crash of the Great Recession. But that doesn’t mean everyone is staying put.

According to TransUnion’s recently released report “From Inflation to Migration: Evolving Consumer Trends and Implications across the Insurance Value Chain,” moving trends have largely been driven by generational demographics.

“Most moves are still local,” said Patrick Foy, senior director of strategic planning for TransUnion’s Insurance business. “About 50% of moves are 10 miles or less, and that hasn’t dramatically changed in recent years.” But Foy said what has changed is that in addition to most moves being in-town, another substantial percentage of residents are uprooting and moving across state lines. About one in five moves right now is more than 250 miles away.

Many of those longer moves have been driven by older generations, particularly baby boomers and older Generation Xers who are moving to retirement destinations, particularly in the South and Southeast. Not to be outdone, millennials are also moving – but they are moving largely from large population centers in the Northeast and West Coast to lower-cost suburban technology hubs, particularly Austin, Fort Worth, North Houston and the Carolinas.

Generation Z is bucking those trends and represents a large group who is moving back into the population centers their older generations are vacating.

How insurance protects belongings while moving

So what does all that have to do with insurance?

Those who are moving must research how they can protect their belongings during their move. A typical homeowners insurance policy won’t protect things during a move. Homeowners policies protect possession if the home is affected by a covered peril, or from theft, but they won’t step in if a mirror was broken in transit or if a dresser falls from the back of a moving truck.

For the possessions in transit, consumers typically look at one of two types of coverage typically offered by movers – released value policies or full value policies.

Released value policies are typically built into the cost of the moving contract. And although these types of policies are convenient, they typically only protect homeowners for $0.60 per pound of the thing being moved. So a 100-lb dresser would only be protected for $60 if it fell from the truck.

Full value policies offer more protection, but they typically cost more and are contracted with a third-party company, even if bought through the moving company. When it comes to what a full value policy will cover, the devil is in the details of each individual policy, so it is important to understand what is and what is not covered before buying the policy.

In addition to protecting the possessions being moved, moving season also holds implications for insurance companies themselves. As people move across the country, insurers must consider how policies might move with them.

One of the implications of the demographic shift detailed by the TransUnion report is that for the older generations who are leaving New York, California, Massachusetts and Illinois and who are going to Texas, Florida and the Carolinas, those new residents will likely face catastrophes they weren’t accustomed to – particularly hurricanes and wildfires.

These newcomers may not be familiar with those risks – particularly if they are renting instead of buying and so aren’t required by a lender to carry protection for their belongings. Insurers should consider how they can communicate the need for coverage to these newer residents.

Pricing new residents’ policies is a challenge

Pricing those new residents’ policies is another challenge – particularly when it comes to driving records after the driver moves across state lines.

“A lot of states have compacts with other states to share moving violation information, but roughly half of those compacts weren’t being consistently followed,” Foy said. “Part of that is driven by backlogged violations.” But the problem also comes down to whether each state relies on moving violations reported to the state department of motor vehicles or if the violations are being drawn from court records.

DMV records might not capture all offenses because they tend to only focus on final adjudication, leaving many offenses either delayed from when they were issued or even off the books if they were settled out of court.

Tracking those drivers as they cross state lines is an increasing challenge for underwriters.

Another insurance implication after a move is if the consumer doesn’t inform the company about the move. This isn’t typically an issue with policies people deal with on a regular basis, such as auto insurance where the customer needs new cards every policy renewal or even health insurance that is renewed annually. But when it comes to more hands-off policies, such as term life policies on auto ACH payment, it is extremely easy for an insurer to lose track of their customer’s address, and for the customer to not realize they have lost track of their insurance company.

And even as people move closer to home, underwriters are facing a challenge after the move – and that comes down to household composition. TransUnion’s data showed an increase in the number of people living in a particular house, especially when it comes to multigenerational housing.

More people in the house means potentially more wear and tear on some components, more potential fire risk, and conversely, less time the house sits empty, translating to less potential theft risk. All of this is causing underwriters to re-think the implications of what larger household size should mean for premiums.

The bottom line is that as people move – whether it is close to home or across the country - each of those moves carries potential insurance implications.