Shipping Insurance 101

Shipping insurance is the process of paying premiums to a third party (insurer) in exchange for that third party assuming the risk (liability) that the third party would otherwise never have.

Every state has a Department of Insurance (DOI) or Office of the Commissioner of Insurance (OCI) to oversee and regulate insurers and agents. They ensure insurers are financially able to cover the liability they are insuring, and that agents are compliant with all federal and state regulations.

Selling insurance? Get a license

Insurance agents or insurance brokers make insurance available to merchants, collect the premium and send that premium to licensed insurers.

An insurance agent or broker is required to carry a license for every state they are selling insurance in.

How shipping insurance works

Customers are given the option to include their shipment on a commercial inland marine insurance policy that provides coverage for the entire shipment process.

This commercial insurance policy covers the item from the time it leaves the merchant’s warehouse until it is in the customer’s hands and they are satisfied with the product.

Unlicensed? Plan for fines.

  • Insurance is a highly regulated industry, stemming from the McCarran-Ferguson Act of 1945
  • You must be licensed in every state you are selling insurance in and follow their unique regulations
  • Severe penalties apply on a state by state basis for unauthorized selling of insurance. These fees can range from $100-$1000 per transaction
  • Offering insurance is complex, and harder to manage than it would first appear
  • Regardless of how it is described, charging customers an extra fee for a ‘promise, guarantee or warranty’ against risk of loss is the of definition selling insurance
  • Insurance providers are regulated by states’ Department of Insurance and must have reserve accounts to demonstrate they are financially sound to manage the risk

The Shipped Suite solution

  • Shipped Shield is a hassle-free solution for resolving shipment issues related to damage, loss or theft, simplifying the process to get a replacement or refund quickly for customers
  • Consumers have the option to purchase Shipped Shield directly from Shipped, reporting shipment issues directly to Shipped.
  • We automate customer service around the entire post-sale experience, streamlining operations to reduce costs, eliminating refunds for shipping failures while boosting store profitability and return-on-ad-spend
  • Shipped Insurance Services LLC, a wholly-owned subsidiary, serves as our licensed insurance producer
  • Shipped’s API and SDK-first solution integrates easily to offer shipping protection, tracking services and third-party certified carbon credits

Ready To Get Started?

Schedule a demo today, or get started in minutes by installing our app.
We also offer free custom integration.