E-Commerce Shipping

When, Where, and How of Shipping Insurance

Wed 06 Sep 2017
By Shan Lian

Shipping Insurance Shippo

To buy or not to buy, that is the question when it comes to shipping insurance. Often times, insurance can feel like a waste of money. But those few times you lose a package or that one-of-a-kind piece is damaged, you wish that you had just spent those few extra dollars.

So when should you buy shipping insurance? Where do you even get it? And how do claims work? We’ve put together an introductory guide for shipping insurance, outlining what you should consider when it comes to insuring your packages. 

When should you purchase shipping insurance?

The rule of thumb is that you should purchase insurance for high-value orders, one-of-a-kind items, or when shipping internationally. It’s about protecting your bottom line. 

A single loss or damage of an expensive shipment can set you back significantly. Not only have you lost the original shipment, but typically you would have to send the customer a replacement and pay for the cost of shipping again. For one-of-a-kind items that are difficult to substitute, you may lose the sale altogether. 

International shipments are prone to loss or breakage since it gets handled by many different parties. Depending on the country you’re shipping to, the risk can be higher. Especially if you’re using a national postal carrier like USPS, the package will be transferred into the hands of the local carrier who may have a different standard of care. Using a private carrier service like DHL Express can be more reliable since the package will be under their care from pickup to customs to delivery.

Often times, you can include insurance as part of the cost of shipping for high-value, one-of-a-kind, or international shipments. Be transparent and explain that insurance is covered. Since customers are already paying for a more expensive, premium transaction, having insurance can also give them reassurance that they are protected. 

Where can you purchase shipping insurance?

You may already be purchasing insurance and didn’t know it. Each domestic FedEx and UPS parcel is covered automatically up to a value of $100 against loss or damage. The U.S. Postal Service provides an automatic $100 of coverage on Express services like Priority Mail Express and Priority Mail Express International. So if the value of your packages is less than $100 you may not need to purchase additional insurance. 

For shipments valued over $100, you can purchase additional insurance provided by the carriers or from a 3rd-party insurer. With Shippo, you can purchase the insurance offered by the carriers or discounted 3rd party insurance provided by our partner, Shipsurance, directly from the label creation step of the app or through the API

Purchasing 3rd-party insurance can be much cheaper than carrier insurance, and they offer a simpler, faster, and paperless claims processing. Here’s a sample of insurance cost:

Insurance comparison

When you’re purchasing insurance, make sure that you review the policies around the coverage. Take special note of:

  • Claimable value - typically the current retail value, not necessarily the value it was sold at
  • Restricted destinations and commodities 
  • Signature confirmation requirements for certain types of goods 
  • Packaging requirements

Take a look at the full Shipsurance terms of service.

How to claim a lost or damaged shipment

As soon as your customer notifies you that package never arrived or a box that was damaged in-transit, make sure you have a process for collecting documentation and evidence of your loss. Your customer service team should know exactly that they are required to collect from the customer so you can process the claim. 

Specifically for Shipsurance, two important areas to keep in mind according to the terms of service:

  1. All packaging material and damaged goods must be kept in the original form as received. Packaging and damaged goods should not be disposed of or released to the carrier before a claim is completed as photographs will be required. Failure to comply will result in the denial of the claim due to insufficient packing.
  2. Concealed damage allows for the discovery of loss or damage up to 15 days after final delivery. The loss is deemed to have possibly occurred during the insured transit. Discovery of loss or damage occurring 16 days or later after final delivery is deemed to have occurred while the shipment was not in transit, and therefore, is not covered.

Filing a claim with Shipsurance is easy and paperless. You have 120 days from the shipment date to provide all the necessary information. You can also visit our Help Center for resources on how to file claims for various carrier insurance.

If you are shipping high-value orders, one-of-a-kind shipments, or shipping internationally, protect your bottom line by purchasing insurance. Both you and your customer can have peace of mind that you’ll be protected in case of any loss or damages. 

Shippo is a multi-carrier API and web app that helps retailers, marketplaces and platforms connect to a global network of carriers. Businesses use Shippo to get real-time rates, print labels, automate international paperwork, track packages and facilitate returns. Shippo provides the tools to help businesses succeed through shipping.
Next post

Sep 07, 2017
International Shipping with DHL Express

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