Did you know, your business can have a negative impact and lose customer’s loyalty due to lost or damaged shipments? And Amcore study found that in the past two years 75% shippers faced the loss for damaged or lost packages.
This is why you must have shipping insurance for small business. It does not matter, you run a small or big shipping company, shipping insurance can save you a huge amount, you can ever imagine.
Therefore, in this article, I am going to share everything about shipping insurance and how it benefits small to big businesses.
What Is Shipping Insurance?
Shipping insurance is a type of coverage provided by the insurance company. This protects your goods against loss, damage, or theft during shipping. It works like a financial safeguard, with the assurance of compensation, if something goes wrong.
Well, if something goes wrong, be it a damaged package, a lost shipment, or stolen merchandise; shipping insurance helps you recover the financial loss. Making sure nothing impacts the business negatively due to poor shipping.
Why Do You Need Shipping Insurance for Small Business?
You see, running a shipping company is pretty challenging where a smooth and protected shipping is almost unpredictable. While showcasing the importance of shipping insurance for small businesses,
Though shipping insurance might seem to be an additional spending, the results for not having it can be far costlier.
So, investing in shipping insurance offers you the following advantages.
1. A Worry-Free Mind: When you are assured that your packages are insured, you don’t have to take stress and anxiety about potential losses.
2. Financial Protection: Shipping insurance covers the cost for lost or damaged goods and prevents any business profit loss.
3. More Satisfied Customer: Customers are more likely to trust a business that handle goods with responsibility and reliability. And nothing can be more trustworthy than having insurance for their purchases.
4. Compensation Support: In case of any loss, insurance can help you with resolving disputes and getting compensation.
By the way, you can also learn more benefits of purchasing a shipping insurance and when you should get an insurance.
US Chamber highlighted that,
“Delivery experience largely impacts businesses of over 98% of e-commerce consumers.”
And without insurance, these problems can result in significant financial losses in the long run. Again according to Federal Trade Commission report,
“In 2023, consumers reported losing $752 million to business imposters”
But shipping insurance can help you avoid these losses. Knowing that your packages are protected can help you feel less worried and focus on growing your business.
How Does Shipping Insurance Work?
Shipping insurance is a simple process. At first, you have to buy a shipping insurance that your business suits.
And using this insurance, you can claim for your lost, damages, or stolen shipping. And then what? They’ll review your claim and decide if you’re eligible for compensation or not.
Basically, the process of shipping insurance involves:
1. Purchasing a suitable insurance
2. Keeping the detailed info of the packaging including invoices and tracking numbers.
3. Claiming for the insurance
4. And kudos! You get the reimbursement
However, there are two main types of shipping insurance:
Carrier-provided insurance– this is provided by logistics providers or carriers such as GLS, Purolator, DHL, etc. These are mostly budget-friendly option with limited coverage.
Third-party insurance-it is offered by a third party company, such as eBay’s ShipCover or Shipsurance. These are more comprehensive than carrier-provided ones but expensive.
However, these easy shipping insurance claiming procedures can be helpful for you.
What Does Shipping Insurance Cover?
Shipping insurance typically covers 3 things.
Package Loss: If your package is lost at the time of shipping, insurance will compensate you for the lost item according to the policy.
Damaged Package: If you find your items damaged on arrival, insurance will cover the repair cost or make process for replacement.
Stolen: In case, your shipment or any item gets lost, insurance can help you recover the value of the goods according to policy deeds.
So, what will be covered in the insurance can vary based on the insurer and the type of insurance policy. For example, some insurance company does not cover insurance for fragile items and high-value shipments.
How Much Does Small Business Insurance Cost?
Shipping insurance for small businesses cost $20 to max $125 per month on average However, the shipping insurance expenses vary depending on the shipping distance, shipping types, business size, and business location.
However, BOP (Business Owner’s Policy) is the best shipping insurance for small business. And it covers almost every type of shipping insurance that any small business needs. And this is the most common type of shipping insurance most businesses choose.
Real-Life Examples & Scams Regarding Shipping Insurance
While doing shipments, we’ve found out such many cases that can make you astonished. For example, Joe’s Electronics, a small business selling gadgets online. Joe once faced a situation where a shipment of expensive headphones was damaged during transit. With shipping insurance, he could claim the loss and replace the items. And this did not even impact his profit share.
According to the Better Business Bureau, package theft is a growing issue, with 1 in 3 people reporting they’ve experienced package theft (BBB, 2024). Shipping insurance can help you navigate these problems and avoid risks.
However, be careful of emails claiming to be from shipping carriers requesting personal information for shipping insurance deals. We get such spam emails a lot nowadays. And these scams can lead to identity theft and risky financial loss.
That’s why, when choosing a shipping insurance make sure to look for their authenticity, legal registration, and authorized verified company.
Conclusion
So, you can assume, how important shipping insurance for small businesses is and how it can help you avoid loss.
Shipping insurance is more than just an extra costing in shipping business. It is an important tool for small to large size businesses looking to protect assets, maintain customer loyalty, and reduce financial loss.
So, incorporate shipping insurance into your business strategy and protect not only your shipment but also your business’s reputation.
FAQs
What is the purpose of shipping insurance?
The main purpose of shipping insurance is to prevent any loss or damage in the time of shipping. This helps retain customer’s trust and maintain business reputation.
Is it worth it to get shipping insurance?
Yes, shipping insurance is worth the investment as it provides financial protection and tension-free shipping method. It helps safeguard your business against the risks associated with shipping and financial loss.
What is the difference between shipping insurance and marine insurance?
Shipping insurance covers the loss, damage, or theft of goods during transit on road or on air shipments. Contrarily, marine insurance includes coverage for marine goods. Marine insurance is specifically set for the marine related damage or issues.
What is the basic shipping insurance?
Basic shipping insurance generally covers the standard risks of loss, damage, or theft of the items during transit. However, basic shipping insurance does not cover insurance for high-value shipping or fragile items. So, you might need to go for some premium insurance package or increase the coverage policy through additional fees.
