E-commerce businesses face an emerging customer expectation for shipping insurance coverage. 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. Shipping insurance, sometimes called parcel insurance, protects both shippers and receivers against damaged, lost, or stolen packages.
How does shipping insurance work?
Every state has a Department of Insurance (DOI) to verify insurers are financially able to cover the liability they are insuring and that insurers are compliant with all federal and state regulations. Insurance agents or brokers make shipping insurance coverage available to merchants, collect the premium and send that premium to licensed insurers.
Customers can include their shipment on a commercial inland marine insurance policy that protects the entire shipping process. This commercial insurance policy covers the item from when it leaves the merchant’s warehouse until it is in the customer’s hands and they are satisfied with the product.
Is shipping insurance from major shipping carriers enough?
Shoppers are unaware and do not care about the actual liability of their shipment throughout all stages of delivery. They will blame the e-cCommerce business for any issue, even when they are not legally liable.
Carrier shipping insurance is not enough.
49 million Americans had at least one package stolen in the last 12 months.
Using insurance from major shipping services is often not enough. Additional insurance is required.
- UPS shipping insurance, like most major carriers, only covers $100 without additional payment, regardless of declared value.
- Major carriers make it difficult to file a claim and get an approved reimbursement for that $100. There can be complicated forms, long waiting periods and unwritten specifications on what is covered and not covered. Processing times can take 2-3 weeks to resolve a claim with another 2 weeks for the paper check to arrive in the mail.
- Carriers are not liable for porch piracy. Even a reputable carrier will not cover theft after a package has been delivered.
- The merchant is responsible for filing shipping insurance claims with the carrier, not the customer.
- Carriers do not cover theft and leave a gap of liability where they have dropped the package off, but the customer has not taken receipt of the package.
- Shipping priority mail through the US Postal Service includes up to $100 of insurance. USPS insurance also does not cover package theft.
Is shipping insurance coverage worth getting?
40% of shoppers will not give a merchant a second chance over shipping related issues, even issues outside the merchant’s control.
- Remove the need for merchants or customers to make claims with transportation carriers over loss or damage.
- Provides coverage for gap areas.
- Quick, easy, and automated claims processing for happier customers.
- Turns lost or damaged packages into a minor inconvenience for customers and merchants.
- Even if the merchant isn’t legally liable for theft or carrier issues, customers will blame the merchant, and merchant reviews are on the line.
Unlicensed? Plan For Fines.
An insurance agent or broker must carry a license in every state they sell shipping insurance.
- Severe penalties apply on a state-by-state basis for the 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.
- Even if insurance wasn’t regulated, is it worth your time to manage it?
- Charging an extra fee for a ‘promise, guarantee, or warranty against the risk of loss is selling insurance and collecting an insurance premium.
Why Shipped Suite is the best solution for package assurance for shipping insurance coverage.
- We automate customer service around the entire post-sale experience, not just package protection.
- Shipped Shield covers headaches from carrier damage, loss, and theft.
- Shipped Insurance Services LLC, a wholly-owned subsidiary, is our legally licensed insurance agency.
- We provide an easy-to-use, integrated solution for shipping protection, tracking, and carbon credits..
What is Shipped Suite?
We are a platform that increases customer lifetime value while uplifting conversion rates and reducing customer support costs and streamlining e-commerce operations.
Shipped Shield is a hassle-free solution for resolving shipping issues related to damage, loss or theft, simplifying the process of getting a replacement or refund quickly.
Consumers have the option to purchase Shipped Shield directly from Shipped, reporting shipping issues directly to Shipped.
We automate the customer experience around the entire post-sale process, streamlining operations to reduce costs and 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.
Shipped Shield is a hassle-free solution for resolving damage, loss, or theft issues, simplifying the process of quickly getting a replacement or refund for customers.
Shipped Track enables visual delivery tracking and real-time notifications to ensure the safe delivery of orders for customers.
Shipped Green offers carbon neutral shipments, enabling brands to be socially and environmentally responsible.
Frequently asked questions about shipping insurance coverage.
What is declared value?
Major carriers require merchants to declare a value during the shipping process to be able to determine their maximum liability for any loss, damage, delay, or misdelivery relating to that package. Major shipping carriers have placed the responsibility of proving any actual damages incurred on the merchant.
The declared amount should reflect the total amount it would cost to replace or repair the items in a package, and certain limits apply to specific items, such as artwork, jewelry, and antiques.
Does declaring a value automatically provide coverage?
Note that declaring a value does not automatically guarantee reimbursement or the exact amount declared. Major carriers require that merchants submit a written claim, and then FedEx, UPS, or USPS will investigate each case accordingly.
Investigations include looking at the packaging chosen and how you packed the shipment – if either of these were done improperly and the package is damaged during the shipping process, most carriers will not be held responsible.
How much is UPS shipping insurance per $100?
The first $100 UPS (United Parcel Service) declared is included. However, everything between $100.00 and $300 incurs an additional $3.45. After $300, the cost increases by $0.15 per $1,000 value. UPS insurance coverage also does not cover stolen packages and requires merchants to file a claim through a complicated process.
How much is FedEx insurance per $100?
FedEx also covers the first $100 declared and requires additional fees based on the parcel’s value.
What is a shipping insurance fee?
The fee is a premium paid to a third party (insurer) in exchange for that third party assuming the risk (liability) that the third party would otherwise never have.
Is it worth it to insure packages?
According to Reuters, 53% of customers expect fast reshipment of damaged items, and 43% expect discounts or swaps for damaged goods. Often an e-commerce business sustains financial losses without shipping insurance.