All Things Shipping | Jun 08, 2022

Your Biggest Shipping Insurance Questions, Answered

Heather Lohmann

When you consider that 1.7 million packages are lost every day in the US, and 70% of consumers say they won’t return to an online store after a poor delivery experience, the risk of not including shipping insurance to protect your customers’ e-commerce orders becomes painfully clear.

We recently hosted our partner Shipsurance for a webinar about all things shipping insurance, from how to add it for your packages to how long the claims process takes. To help you get a better understanding of the whys, whens, and hows of insurance, we’ve collected some FAQs inspired by the 40-minute session and answered them for you below.

When is the right time to add insurance?

Having to replace valuable products that get damaged or lost in transit can hurt your bottom line, so when shipping these types of packages, adding insurance is often a great idea. For example, it makes sense to insure big ticket items such as noise-canceling headphones or hand-crafted jewelry to make sure those more expensive orders are protected in case of damage or loss.

Spending a little extra time to insure your products far outweighs the risk of having to cover the total cost should something happen to it in transit.

In which cases should you not add insurance?

There are some rules and restrictions in place to help mitigate the chances of a package being damaged or lost. There is a small list of excluded products that Shipsurance does not cover:

  • Some electronics including TVs and monitors cannot be insured (laptops and cell phones are insurable, as well as most electronics without screens); this includes items with LCD/LED monitors or screens, such as LCD, plasma, CRT, projection, and other televisions
  • Documents such as passports, securities or deeds, tickets, manuscripts, or currency including bills, cash in transit, evidence of debt, money orders, cash on delivery (COD), gift cards, and coins
  • Specific types of glass such as stained glass, plate glass, or float glass
  • Anything deemed to be hazardous per UPS Hazardous Materials List
  • Cigarettes, cigars, or tobacco products
  • Vehicles including automobiles and motorcycles
  • Some foods, including eggs
  • Perishable cargo
  • Live trees, flowers, plants, or seeds
  • Live animals
  • Specific fragile items
  • Neon items, including signs
  • Stone or ceramic slabs

There are also some countries that Shipsurance cannot insure packages to.

And one final note – you cannot insure a package if the packaging alludes to the contents inside, or if it’s shipped in the manufacturer’s packaging (more on this below).

What’s needed to file a claim when an item is damaged?

If there is a claim for damage, make sure your customer keeps the items and the packaging as they received them so that Shipsurance can request photos if need be, and to make sure it doesn’t get lost or further damaged via return shipping prior to completing the claims process.

What if a customer refuses to complete an affidavit?

If you can’t get a hold of your customer or if they refuse to complete the electronic affidavit, Shipsurance’s team can work with you on a case-by-case basis to figure out what other forms of communication from the buyer might be acceptable. For instance, you might take a screenshot of when they reached out to you and send that to move forward with the claims process.

How do I include shipping insurance?

You can easily add shipping insurance to any order during the label creation process directly in Shippo! Your connected store items will automatically populate, or you can add them manually if need be, and you can further protect your package by including a signature confirmation. Before you purchase, just add insurance and total value when you review the label, then simply download and print the label to send your insured order on its way.

What if the tracking shows delivered, but my customer said they never received the package because it was stolen?

If there is video evidence of someone stealing a package or a police report has been filed because a witness saw someone take something off a porch, you won’t necessarily receive coverage. Those types of cases involving theft on the property would typically be turned over to a homeowner’s or renter’s policy.

How does packaging impact shipping insurance?

As stated above, your shipment must be sent in completely nondescript packaging in order to be insured. If someone can walk by and know exactly what’s in the package because it features a certain manufacturer’s branding, for instance, it can increase the chance of theft. However, USPS and other carrier branded packaging is absolutely fine to use.

How long does an insurance claim take?

It typically takes about five business days, and as soon as the claim is processed, you’ll get paid via paper check, electronic check, or PayPal. Shipsurance quickly reimburses you so that you can send a replacement order ASAP and keep your customers happy.

Can I recover shipping fees with shipping insurance, or is it just the item cost that’s covered?

Shipsurance can cover both the retail value of the item as well as the shipping costs – just make sure to add those costs to the total value when you opt to insure your package.

Do I need to require a signature to be covered with shipping insurance?

Certain items do require a signature in order to be covered, such as laptops, watches valued at $1,000+, or anything valued at over $10,000.

Should I add shipping insurance as an option for customers to purchase with their orders?

Allowing your customers to opt for insurance in their cart experience – or even just clearly communicating with them on your site that you insure your e-commerce orders – can add more trust in the shipping process from the consumer side, which helps encourage more online purchases.

What’s the benefit of using a shipping solution or 3rd party provider over purchasing shipping insurance through the carrier?

The claims process usually takes a lot longer and can be more cumbersome than if you insure via a 3rd party provider or shipping solution such as Shippo. With Shippo, for instance, it’s cheaper to insure than it would be directly through the carrier, and any claims filed are managed directly with Shipsurance as opposed to dealing with the carrier.

How does insurance work for multiple boxes going to a single customer?

Coverage is determined on a per package basis, not on a per shipment basis, so multiple packages must be insured individually.

How should I communicate the claims process to my customer if their package is lost or damaged?

You can add the details to an FAQ page on your website or in an order confirmation or tracking email so that if a package is lost or damaged, your customer knows exactly what to do. If you’ve added insurance through Shippo, your customer simply needs to contact you about the package, and then once you initiate the claim with Shipsurance, their team will send you an affidavit link to forward to your customer.

By adding Shipsurance through Shippo, you’ll not only get a fast and easy claims process, you’ll also be reimbursed quickly and enjoy affordable premiums. Sign up for a free Shippo account to protect your revenue from damaged or lost packages and keep customers secure and satisfied. If you’re already a Shippo customer, simply head to your Orders page to add shipping insurance. You can also check out our help center for additional information and tips, or watch the full recording of our webinar with Shipsurance to learn more about the value of adding shipping insurance.

Heather Lohmann is a Senior Content Marketing Manager at Shippo.

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