Military Housing - Military Times

As full replacement coverage kicks in, confusion remains

Some service members have misperceptions about the new policy providing full replacement value coverage for damaged or lost household goods, officials say.

Some are unclear about when the coverage started, for example. “Some people thought they had FRV coverage if their shipment was delivered” after the program took effect, said Joe Goetzke, chief of the personnel claims and recovery division for the Army Claims Service.

That’s not true; it is effective only for shipments picked up after the program took effect.

The Defense Department began full replacement value coverage Oct. 1 on international shipments and Nov. 1 on domestic shipments. Congress mandated that the coverage be fully in place by March 1; coverage will take effect for the remaining parts of the program, such as nontemporary storage, at that time.

Previously, troops could be reimbursed at a rate of $1.25 multiplied by the weight of their shipment, up to $40,000 — and the government paid for depreciated replacement cost, not full replacement value.

Now, moving companies can be liable for up to $5,000 per shipment, or $4 multiplied by the net weight of the shipment in pounds, up to $50,000, whichever is greater. Weight does not become a factor until a shipment goes over the $5,000 threshold.

The new coverage is not retroactive. “If you moved during the summer, you can’t just wait to file your claim until after Nov. 1 to get FRV,” said Scott Michael, vice president of military and government relations for the American Moving and Storage Association.

The only exception would be military customers who had purchased full replacement value coverage from the moving company with their own money.

“There is some confusion about what FRV means,” said Michael, noting that many customers apparently believe they are entitled to a new item even if the damaged item can be repaired.

“If an item is only slightly damaged, the mover has the ability to repair the item if that is more economical than replacing it,” Michael said. “You don’t get a brand-new table just because there is a scratch on the old one. The mover has to fix the scratch, but if they can fix it, they don’t have to replace the entire item.”

It’s a little early to tell how the program is going. “People are pleased it’s out there,” said Candace Wheeler of the National Military Family Association. “But since this is not the season when people move, it hasn’t been put to the test. We’ll see how it works this summer.”

The government does not have authority to pay full replacement value directly to service members, Goetzke noted. Claims officials would pay depreciated replacement cost, as is now the case, and then seek the full replacement cost from the moving company to reimburse the service member. The law allows the government to deduct the full replacement value from the fees it pays to the moving company, if the company fails to settle.

Surface Deployment and Distribution Command officials offer several reminders:

å Service members must first try to file claims directly with moving companies, within nine months of the delivery date. If a claim is filed with the moving company after nine months, but before the maximum two-year time limit for filing a claim, the company is liable only for the depreciated value of lost or damaged items. War or armed conflict may extend the initial filing period beyond nine months.

å If a moving company does not respond within 30 days, denies the service member’s full claim, or makes an offer on the claim that is unacceptable, the member may transfer the claim to the military claims office.

Moving companies are responsible for getting estimates of repair and replacement of items, which will save time and frustration for military families, Goetzke said.

Moving companies also will pay more to repair items than they would in the past, he said, because it is cheaper than paying for full replacement.

All the military services have noticed a dramatic decline in the percentage of claims over the last 10 years, Goetzke said.

One analysis in 1997 indicated that 19 percent of military shipments resulted in claims. A full analysis has not been done since then, but a 2004 data analysis indicated that the claims rate on international shipments was about 10 percent, as military transportation officials tightened quality control and companies developed systems to reduce loss and damage.

Full replacement value coverage may cost the military more, but the goal is better service, Goetzke said.

“By increasing the liability, the quality of the move gets better; there’s less loss and damage,” he said. “That’s what we want to do — not just reduce the number of claims, but the severity.”