Valuation is actually clarifying how the shipper will be compensated should a total loss or partial loss occur to the items being transported. “Declared value” is the monetary amount at which the shipper agrees to be wholly reimbursed should a total shipment loss occur. The shipper either declares some fixed dollar amount as the value or releases the shipment to a value determined from the weight of the shipment. There are three types of valuation: replacement or full value (depreciated or released). These three types determine how the shipper is compensated should damage occur to an item and that damage results in a total loss for the item.
Replacement/Full Value: the shipper is compensated for the cost to replace the item (i.e. the cost of a new/comparable item)
Depreciated: The original cost is used and then it is depreciated (i.e. reduced by some formula) based upon the age of the item
Released: If the shipment is released at .60 per pound per article, then the value of the article is calculated using the weight of the article multiplied by $.60/lb
Take a refrigerator that cost $800 5 years ago that would cost $1000 to replace today and that weighs 250 lbs.
Replacement: would compensate the shipper at $1000
Depreciated: might be something like $200-$300
Released would be $150
Note that the above is for damage resulting in a total loss to the article. Typically, claims are about scratches to furniture so the claim often involves some sort of repair that would cost less than the “full value” but the “full value” does limit the amount the carrier is obligated to spend to repair the item. If it is a released at .60 per pound and it weighs 10 lbs, then the limit is $6.00 for a repair or replacement.
The carrier accepts shipments subject to rules about what is an acceptable “valuation”. For example, the total weight of the shipment is used to calculate a minimal replaced or depreciated valuation amount and the shipper is required to declare at least this minimum value. And the shipper’s declared value which dictates the valuation charge the shipper will incur.