If you’re shipping something of value, odds are you want it to arrive in a safe and timely manner. Especially as a merchant or ecommerce business, ensuring that products are shipping successfully can be the difference between a good financial year and a great one. The increase in online shopping and consumerism only forecasts this becoming more important as time goes on, with growth typically experienced in a decade occurring in only three months time in 2020. As a business owner, shipping protocols and best practices can get pretty complicated, especially once you start shipping products like alcohol that tends to feature more shipping restrictions.
With so many elements that can go wrong during shipping, taking the step to insure these goods is a lucrative idea. Shipping insurance might seem complicated or overwhelming to some, but once understood can make or literally break a business’ efforts to satisfy their customers. For those looking to learn more about shipping insurance, you’ll be happy to learn we’ll cover:
- What is Shipping Insurance?
- What Does Shipping Insurance Cover?
- How Much Does Shipping Insurance Cost
- Third Party Shipping Insurance
What is Shipping Insurance?
In simplest terms, shipping insurance is the protective measure of securing products for shipment. Shipping insurance can protect goods from a variety of unfortunate circumstances, typically including theft, damage, improper handling, and more. Shipping insurance assumes financial responsibility for these goods up until the point they arrive to the designated shipping location. Especially as an exporter, there are numerous steps and stages of the shipping process that can provide complications in delivery, and having a safety net in place for these circumstances is priceless. Instead of biting shipping fees for goods that weren’t delivered correctly and losing potential revenue, the exporter can trust that the shipper assumes financial liability.
What Does Shipping Insurance Cover?
With an increase in online sales, comes an increase in shipping insurance options for ecommerce businesses and online merchants to use to their advantage. The situations that are covered by shipping insurance will vary widely based on the shipping insurance policy chosen and the shipping company that is providing the services. Typically, shipping insurance covers incidents in which the seller has no control, such as delivery delays, damage to goods, or shipping malpractices that take place prior to the delivery. Each provider has unique requirements, restrictions, and unique coverage details that sellers need to consider before choosing their preferred insurance provider.
UPS Shipping Insurance
The United Parcel Service is a common choice for those looking to purchase shipping insurance, and are a reliable carrier for those looking to insure their goods. UPS offers insurance through UPS’ licences affiliate UPS Capital insurance Agency Inc. UPS Capital coordinates insurance details to make sure customers are getting a great policy based on their current shipping needs, with online quotes available through InsureSheld Instaquote. Outside of their insurance options, UPS also offers customers to declare the value of their item, with a certain level of coverage already provided, but not necessarily providing insurance.
UPS can be a bit particular about using their designated insurance company to ensure goods are properly shipped, but they also have a few limitations to coverage that should be noted prior to choosing UPS as a preferred carrier. UPS does not assume liability for loss or damage resulting from improper packaging, checks, data stored on media, perishable commodities, natural disasters, Acts of God, and many more. If you’re shipping items that are not found on UPS’ extensive list of articles that cause complications, they might be a carrier to consider.
FedEx Shipping Insurance
FedEx, like its competitors, offers customers the ability to get coverage for their items if they’d like to guarantee that the parcel arrives in a safe and timely manner. Every package has an automatic coverage of $100, and if the declared value of the parcel is higher additional coverage can be easily purchased in-person or online. Once a customer wishes to get shipping insurance for an item they must declare it’s value, with different values set at specific levels of coverage.
FedEx is also particular about how customers declare the value of their items, and have maximum value limits on select goods, such as items of extraordinary or hard to determine value. These items include artwork, antiques/collectibles, precious metals, and more. While this doesn’t mean they are outright denied insurance, it does mean that the full value of the item may be lost if there are issues within the delivery process. Additionally, if an item arrives broken but can be repaired by the seller, FedEx will not assume liability for the failed delivery.
United States Post Office Shipping Insurance(USPS)
If you’re looking to the United States Postal Office for shipping insurance, you’ll be in experienced and trustworthy hands. USPS covers up to $5,000 for goods or products that are lost, managed, or missing while in the custody of the USPS, and customers interested are able to purchase this shipping insurance in-person or online..Additionally, certain mail classes such as Priority Mail and Global Express Guaranteed will automatically include an amount of insurance coverage.
If you’re in a time sensitive industry or need something sent in a quick and reliable manner, the USPS may not be the place to get insured. USPS does not cover expedited delivery or guaranteed delivery times, so shipping times can vary and expressed shipping is not something that would be compensated if the shipment arrives late. Quick shipping has become a huge selling factor for consumers, with two-day shipping becoming the gold standard. While USPS has options to send your goods quickly, they won’t front the bill if something gets delayed along the way.
DHL Shipping Insurance
Especially common for international shipments, DHL is another reputable carrier that provides comprehensive insurance options for merchants to help feel rest assured their delivery will run smoothly. Through DHL Shipment Value Protection and DHL Security Services, customers are able to get protections against physical loss and damage during transit, with special security services in place to ensure that customer assets are protected throughout the entire delivery and supply chain process. DHL also boasts a quick customer satisfaction rate, with customers compensated for issues within 30 days.
Unfortunately, if the value of your item is less than $100, DHL does not assume automatic liability at no charge. In order to guarantee that any level of return will take place is by purchasing shipping insurance at an extra cost. DHL also does not provide coverage for items that are indirectly lost or damaged, or items that are lost or damaged due to delays. Similar to USPS, it’s a great option if you’re looking to ship to a specific international location, but it won’t guarantee a timely and quick delivery.
How Much Does Shipping Insurance Cost
Shipping insurance costs will vary widely depending on the type of parcel being sent, how frequently shipments are made, and the value of the shipment. Each carrier will feature competitive insurance rates, with DHL being the unique outlier solely due to the international nature of shipment and the unique factors that go into customs clearance.
|Value of Contents||USPS Insurance Cost|
|Items up to $50||$1.65|
|Items $50.01 – $100||$2.05|
|Items $100.01 – $200||$2.45|
|Items $200.01 – $300||$4.60|
|Anything over $300 – $5000||$4.60 + $0.90 per $100 increase|
|Value of Contents||FedEx Insurance Cost|
|Up to $100||$0|
|$100.01 – $300||$3|
|Every additional $100 after $300||$1|
UPS Insurance Costs
|Value of Contents||UPS Insurance Cost|
|Up to $100||$0|
|Every additional $100 afterward||$1.05|
Third Party Shipping Insurance
While we’ve touched on the major carriers that provide shipping insurance, let’s not forget about some of the amazing third-party shipping insurance options available for merchants to explore. Each business is different, with unique shipping needs that may be better addressed with a third party provider. There are many advantages to choosing third party shipping insurance, such as the ability to insure items among all major carriers and submitting unknown carriers for approval. The third part nature of these options allows sellers the ability to have a single point of contact for any issues that come up and feature great tracking software that gives merchants an additional peace of mind.
These features can save online sellers countless profits in the long run, so understanding all options before pulling the plug on an insurance provider is crucial. Some of the most popular third party shipping insurance companies include:
- Route: The worst part about shipping complications is being unaware of where the parcel is located within the shipping process. This is where Route steps in and allows your shipping services to thrive. Route’s insurance policy and contract features a modern tracking experience that provides peace of mind to both the seller and consumer. Customers and sellers are able to easily report issues through the Route app, reducing delivery delays and saving thousands in potential profit.
- Shipsurance: Featuring competitive insurance rates of frequently 90% less than competitive carriers, Shipsurance seeks to become a business partner rather than solely an insurance provider. Shipsurance is an insurance agency, not a shipping service, which allows them to save money and provide lower insurance rates. They ditch declared value at the door and insure parcels by employing a collective team of experienced shippers with the goal of getting items delivered correctly in a cost-effective manner.
- eCabrella: This shipping software company offers customers an alternative option to major couriers by providing competitive rates and customized parcel insurance plans that compliment your business’ specific shipping process. International and domestic shipments are equally protected and shipment restrictions are minimal.
- Parcel Insurance Plan: PIP insured lost and damaged packages domestically, with international options available as well. They provide coverage for numerous articles that other carriers do not, such as electronics, cell phones, jewelry, and more. PIP is perfect for those that know that they’re shipping goods that get a little complicated with the major carriers.
Let ShipCalm Help You With Your Shipping Needs!
Shipping management can be a complicated process, with countless delivery and shipping factors to consider in choosing the best delivery practices and shipping insurance. Guaranteeing to customers that their orders will arrive as expected is crucial for business growth and prosperity, and choosing to insure these items allows business owners the chance to reduce sunken costs. ShipCalm is a third-party logistics company that understands the full scope of inventory and shipping management. Our Fulfillment Services are extensive, with the goal of helping business owners focus on quality customer service while we focus on product delivery. Request a custom price from ShipCalm today or contact us today to learn how we can innovate and simplify shipping services for your business!