Shipping Insurance: Your Ultimate Peak Season Shipping Defense
Nothing puts a bigger damper on festive holiday spirits than damaged, stolen, or lost packages. Although shipping delays and the aforementioned incidents occur year-round, the emotional toll they take can be heightened during the already stressful gift-giving season.
Porch piracy especially tends to spike around the holidays. Data from home security provider Vivent finds that 80% of Americans have fallen victim to porch piracy during the holidays, while a whopping 18% have lost more than $1,000 to holiday porch pirates.
In these times, customers will turn to your business for help. If you’re not able to provide that in a timely fashion, you’ll risk losing out on a potential repeat customer. Repeat customers spend an average of 61% more than new customers so not handling these unfortunate incidents quickly can end up costing your business tons in the long run. But, reimbursing items and shipping the same item twice could cost your business in the short run. So what can you do?
The key to limiting your losses—not to mention the negative customer sentiment associated with them—is shipping insurance. Read on to learn why shipping insurance is your ultimate peak season defense—and how you can start offering affordable coverage today.
Why You Need Shipping Insurance For the Holiday Season
If the statistics above haven’t convinced you of the need for shipping insurance during the holiday season, consider the following.
Limit Financial Losses from Lost, Stolen, or Damaged Packages
The most obvious reason to add shipping insurance when purchasing labels is to minimize the financial impact your company may incur due to lost, stolen, or damaged packages. This is especially impactful during the holiday season if you’re forced to eat the costs of expediting replacements to meet Christmas shipping deadlines. With Shippo Total Protection, our insurance offering not only covers the cost of the item inside the package but also the cost of the original shipping label, return shipping (for damaged parcels), and reshipping label.
Protect Your Brand’s Reputation
Consumer research regularly demonstrates that brand reputation matters to customers when they’re choosing what and where to buy. Lost or stolen packages hurt your company’s standing in the eyes of consumers, but leaving them without proper recourse does even more damage. Adding shipping insurance gives you the financial flexibility to make things right with customers while recouping your losses through the claims process.
Encourage Sales and Repeat Customers
Trust plays a major role in buyers’ decision-making processes. By letting your customers know that all items are insured, you give them confidence to make a purchase and know that the order will be protected no matter what. This motivates prospective customers to make an initial purchase. And if something were to go wrong with a customer’s order, having shipping insurance to quickly reimburse that customer can turn them into a loyal customer. Loyal customers are worth 22 times more than average customers so it is paramount that you provide a quality experience in these stressful situations.
Empower Customer Support and Financial Teams
Finally, shipping insurance supports your company’s customer service and financial teams over the holidays. First, it gives your customer service reps a simple path to resolve issues that arise in the shipping process. At the same time, your company’s finance team doesn’t have to eat the cost of missing, damaged, or stolen packages for very long since shipping insurance (like that provided by Shippo) can often get your claims handled in just 3 business days.
Difference Between Carrier Shipping Insurance and 3rd Party Shipping Insurance
When it comes to adding shipping insurance, you have several options. Most fall into one of two categories: shipping insurance that you purchase through carriers or shipping insurance that you purchase through a 3rd party provider.
Here are some of the key differences between the two:
Shipping Insurance from Carriers
When purchasing shipping insurance from carriers, costs are assessed on a per-package basis. Most standard shipping services include a minimum amount of insurance in their shipping fee (typically $100 for many USPS, FedEx, and UPS services).
If the value of your package exceeds this limit, you may be able to purchase additional insurance separately for eligible items. Then, if something unfortunate occurs to your package while in transit, you can request reimbursement up to the covered amount through your carrier.
Keep the following guidelines in mind when considering carrier-based shipping insurance:
- Some types of shipments do not qualify for shipping insurance, such as those containing hazardous materials or currency.
- Individual shipping services may limit the total coverage that can be purchased. For example, items shipped by USPS Priority Mail can only be covered up to $5,000, while FedEx and UPS offer services with limits between $50,000 and $100,000.
- If you sell high-value items that exceed these limits, you may need to look for specialized shipping services or consider 3rd party shipping insurance. You’ll likely also want to complement your shipping insurance with enhanced delivery options like signature confirmation.
- Each carrier has its own rules for filing reimbursement claims. Still, in every case, it’s important to maintain a paper trail showing when your insurance was purchased, how much coverage was purchased, and that your packages were scanned correctly at the time of shipment.
3rd Party Shipping Insurance
Third-party shipping insurance typically offers more enhanced coverage —and often at a lower cost.
For example, suppose you’re shipping a package with a value of $150 to a domestic buyer. To cover the item’s full value beyond the $100 insurance included, your cost would be $2.45 if you ship via USPS or $2.70 when shipping through FedEx or UPS. Using a discounted 3rd party shipping insurance like Shippo Total Protection, you’d pay just $1.88.
Benefits of Shipping Insurance Through Shippo
Though these cost savings are compelling, there are many other reasons to consider purchasing 3rd party shipping insurance.
- No minimum fees: Shippo’s enhanced shipping coverage through XCover, also known as Shippo Total Protection, comes with no minimum fees and offers discounted rates as low as 1.25% of your package’s value. Though the difference between Shippo Total Protection’s no-minimum fee service and carriers’ minimum fees may seem small, the savings can quickly add up over a busy holiday shopping season.
- Easy and fast claims process: One of the most common complaints about carrier-based shipping insurance is the length of time needed to resolve claims and request reimbursement. Shippo Total Protection streamlines this process with paperless claims processing and a centralized online portal for enhanced visibility into your claim’s status. Additionally, with Shippo Total Protection, most claims only take up to 3 days to fully process and be reimbursed, so you get your money back quickly and can keep your cash flow steady.
- Global coverage: Depending on the carrier and specific service line, traditional shipping insurance options may be limited based on your packages’ final destinations. With Shippo Total Protection, shipments originating from the United States, Canada, United Kingdom, Germany, France, Spain, Italy, and the Netherlands are covered worldwide (excluding delivery to sanctioned countries).
- Automated shipping insurance: To save time during the holiday season and beyond, you can automatically add shipping insurance to all packages or those above a specified value on Shippo. This reduces the manual effort associated with adding insurance for each individual order and frees up your time during the busy holiday season.
To get started with Shippo Total Protection, check out our guide to the provider’s enhanced shipping insurance services. If you don’t already have a Shippo account, register for free to start accessing the best shipping rates from 40+ global carriers.