In e-commerce, the most important thing is getting shipments to customers within the shortest time possible. Besides, you must present the products in perfect condition, as they were from their shipment point. However, sometimes, things do not go as planned. Your shipment may get damaged, especially when shipping fragile items. Also, the products may get lost. This could impact your business’s profit margins. Total loss of items in transit means financial loss. Damaged items also result in losses, as no customer will accept damaged items. So, what is the way forward?
This is where shipping insurance comes in. Small businesses with tight profit margins benefit primarily from insuring their shipments as they eliminate the chances of losses. But do you need to purchase insurance every time you ship? While shipping insurance is vital in any business involved in e-commerce, some goods are better off shipping without buying insurance. The decision to buy shipping insurance depends on your cost-benefit analysis.
Read through to learn more about shipping insurance.
What Is eCommerce Shipping Insurance?
Shipping insurance is coverage that protects customers’ products when shipping. The coverage protects shipments against damage or loss. Major carriers offer insurance coverage for their shipments. Alternatively, you can purchase insurance from third parties. The latter offers comprehensive coverage at a lower cost. Consider a third-party insurance company when shipping valuable products beyond the primary shipping company’s insurance coverage.
Shipping insurance cost varies from one carrier to another. However, the calculation of insurance costs is standard across the shipping industry – calculated based on the package value. Individual carriers may set payout and coverage limits to cushion themselves against immense loss.
File a claim if your package got lost or arrived in poor condition. However, you must prove that the damage happened in transit to receive compensation. The carrier will go through the claim, and you’ll be compensated if verified. Note what products are covered and what aren’t before filing a claim.
ShipSimple has favourable shipping insurance rates. Besides, getting compensation from them for lost or damaged products in transit is effortless. Their staff has simplified the claiming process, ensuring businesses get their fair share when things work against them.
How Does Shipping Insurance Work?
Shipping insurance comes when you plan to deliver your products to the customer’s destinations. You buy insurance from your shipping company or third-party insurance company. When your items are damaged, lost, or stolen, you get compensation for the shipment’s declared value. Some shipping companies like UPS and FedEx incorporate insurance coverage into their service rates up to a particular package value. For instance, UPS insurance covers up to $100 in declared package value. However, you must buy extra insurance if your package exceeds this cap.
During shipping, if something goes wrong and your shipment is lost or damaged, you file a claim. The claiming process isn’t standardized; each carrier has its unique process and requirements. However, when filing a claim, ensure you have receipts, shipping information, and documents proving the package’s declared value.
Keep note of the claim filing deadlines. You must file your claim before the deadline. For instance, when shipping with FedEx, you have 60 days to file a claim for domestic shipping and 21 days for international shipping.
What Does Shipping Insurance Cover?
Shipping insurance covers everything you ship:
Other document types
However, you’ll only get compensation when:
The shipment is delayed beyond a reasonable time
Your shipment is lost or misplaced
Your shipment is stolen
Your shipment is damaged while in transit
What Is Not Covered by Shipping Insurance?
While shipping insurance covers most products, it, however, doesn’t cover the following items:
Glass and mobile phones
Liquids and fresh food
Fine arts, precious stones, and jewelry
Currency, bills, accounts, securities, and deeds
Alcoholic beverages, tobacco, and tobacco products
Livestock and live plants
However, for the covered products, you won’t be compensated if:
Your shipment lost value due to wear and tear.
Your shipment was damaged due to the parcel or its contents leaking.
Your shipment got lost due to inappropriate packing.
The wilful misconduct of your agents resulted in damage or loss.
Do I Need Shipping Insurance – Is It Worth It?
It is entirely upon you to decide whether or not to have shipping insurance. However, buying one when shipping high-value products is a good idea. This way, you can get compensation if they are damaged or get lost in transit. Besides, having shipping insurance assures you your shipment is safe, or at least its value and thus gives you peace of mind.
However, before deciding whether to have shipping insurance, consider its cost implication on your budget sheet and profit margins.
When To Purchase Shipping Insurance
Some situations demand shipping insurance. However, before buying shipping insurance, factor in the shipment value, the carrier policies, and the type of shipment (domestic or international).
Purchase insurance when shipping high-value packages like furniture and electronics. However, you can involve your customer in deciding whether to buy insurance. At checkout, add the option to buy insurance at an extra fee.
National Carriers Insurance Coverage
Let’s explore the insurance coverage policies of major carriers.
FedEx’s insurance policy covers up to $100 on declared package value. You must, therefore, buy insurance when shipping products with values exceeding $100. Take a look.
$100.01 – $300.00 package value – $3.90 fee
Each additional $100 – $1.30 extra
USPS Priority Mail, Priority Mail Express, and Global Express Guaranteed cover up to $100 on declared package value. Below is what you’ll incur for additional insurance.
$0.01 – $50: $2.65
$50.01 – $100: $3.40
$100.01 – $200: $4.30
$200.01 – $300: $5.65
$300.01 – $400: $7.10
$400.01 – $500: $8.60
$500.01 – $600: 11.50
$600.01 – $5,000: $11.50 plus $1.75 per $100 over $600 in declared value.
UPS insurance policy covers up to $100 in declared value on the products you ship. However, when shipping high-value packages exceeding $100, you can opt for one of the following options.
InsureShield basic insurance. Selected businesses can opt for this insurance coverage when shipping items worth up to $70,000. This only applies to package shipping. However, for freight shipping, it can cover up to $100,000 in declared value.
Expanded insurance. This insurance coverage is ideal for consequential losses. It cushions customers against loss or damage of items, which is primarily not covered by the carrier’s insurance policy.
Insurance for perishable goods. Perishable goods are time-sensitive, and any delay will result in losses. This insurance covers seafood, flowers, pharmaceuticals, and other perishable goods.
For jewelry insurance coverage, buy your insurance through Parcel Pro. This insurance coverage covers up to $150,000 in declared package value.
The standard UPS insurance costs are as follows.
$0.01 – $100: $0
$100.01 – $300: $3.90
Every additional $100: $1.30 extra
Filing Insurance Claims For Lost Or Damaged Packages
You must file a claim immediately after you discover damaged or lost items. Note that shipping and third-party insurance companies have deadlines beyond which you can’t file a claim. Support your claim with shipping documentation, proof of value, and receipts.
After receiving the claim, many carriers will try to look for your misplaced or lost package. You’ll have to wait for at least 14 days. If untraced, they will initiate your compensation process.
Insure Your Shipment Today
Shipping insurance is the only way to enjoy peace of mind and protect your high-value shipment. Fortunately, many shipping companies and third-party insurance companies offer shipping insurance coverage. However, ShipSimple is your best shot if you want peace of mind while undertaking your e-commerce business.
Unlike other shipping companies, which limit their coverage to a $10,000 cap, ShipSimple’s exclusive shipping insurance covers up to $250,000 in declared value. You can sign up for free if you don’t have an account to insure your shipment today.