How Does Shipping Insurance Work and Protect Your Packages

Shipping insurance is a crucial aspect of protecting your packages during transit. It's a type of coverage that reimburses you for losses or damages to your shipped items.

You can purchase shipping insurance from your carrier or a third-party provider, and the cost varies depending on the value of your package and the level of coverage you choose.

Shipping insurance typically covers damage, loss, or theft of your package, and the claim process is usually straightforward.

The cost of shipping insurance is usually a small percentage of the package's value, making it a worthwhile investment for valuable or essential items.

Many carriers also offer free shipping insurance for packages under a certain value, which can be a great option for smaller items.

If you're shipping packages, you'll want to consider insuring them to protect against loss or damage. You can take advantage of FedEx insurance by filling out the value section of the shipping form when you drop off the package.

Packages worth less than $100 are already covered, so you don't need to worry about purchasing additional insurance. However, if your package exceeds $100 in value, you'll need to declare the value and have documentation ready in case of a claim.

You can also pack your own item and have it picked up at your location, which is ideal for businesses shipping large numbers of packages. Just make sure to follow FedEx packing requirements to ensure a smooth claims process.

To add an extra layer of protection, you can offer customers the option to add package protection at checkout through a free app like Norton Shopping Guarantee with Package Protection by EasyPost. This will give customers peace of mind and establish your brand as trustworthy.

Here are some benefits of using third-party shipping insurance:

By adding shipping insurance to your ecommerce store, you can provide customers with a sense of security and build trust in your brand.

Shipping insurance costs can vary depending on the type of service you select and the items you're shipping. For example, FedEx SameDay & SameDay City has a maximum declared value of $2,000, and the additional cost for declared value is $3 for shipments up to $300, then $1.25 per $100 for values over $300.

The cost of shipping insurance also depends on the carrier. For instance, USPS has a maximum liability of $5,000 per package, while UPS and FedEx have a maximum liability of $50,000 per package. This means that if you're shipping high-value items, you may want to choose a carrier with a higher maximum liability.

Here's a breakdown of the costs for shipping insurance with different carriers:

The cost of shipping insurance can vary significantly depending on the carrier and service you choose. FedEx, UPS, and USPS all have different pricing structures.

FedEx's cost for insurance is based on the type of service and the value of the items being shipped. For example, FedEx SameDay City has a maximum declared value of $2,000, and the additional cost for declared value is $3 for shipments up to $300, or $1.25 per $100 for values over $300.

UPS, on the other hand, has a maximum liability of $50,000 per package, and the cost of insurance is calculated based on the declared value. For example, if the declared value is between $100.01 and $300.00, the fee is $4.35.

USPS also has a maximum liability of $5,000 per package, and the cost of insurance is calculated based on the declared value. For values between $0.01 and $50.00, the fee is $2.75.

Here's a breakdown of the cost for each carrier:

It's worth noting that the maximum liability for each carrier is $50,000 per package, except for USPS, which is $5,000 per package.

Using carrier offerings like declared value can be a challenging process, as it's up to the sender to prove the carrier is responsible for the claim.

The carrier's liability is limited to the declared value of the package, which may not be enough to cover the full cost of repairs or replacement.

To be eligible for reimbursement, you must prove the carrier is at fault, not just that damage or theft has occurred.

It can take several months or up to a year to receive reimbursement, leaving the shipper financially accountable until after the loss has happened.

The carrier will only reimburse the cost for repairs, the depreciated cost of the shipment, or a replacement cost, not the full value of the package.

Shipping insurance covers what happens in transit, including delivery delays, damage to items, and failure to collect payments on delivery. This means you're protected against mishandling that's out of your control.

If a package is damaged, lost in transit, or stolen from a doorstep, the customer files a claim with the insurance provider. This may require providing documentation, including photos of product damage.

The carrier or provider will review the customer's claim and either approve or reject it. If the claim is approved, the customer will receive a reimbursement within a few business days.

According to a study, up to 11 percent of packages are damaged during transit. This risk varies by carrier, with UPS and USPS experiencing 11 and 10 percent damage rates, respectively.

Here are the percentage of damaged packages by carrier:

Purchasing the right amount of insurance is key and involves stating a “declared value.” This ensures you're covered for the full value of your shipment.

Package protection is a must-have for businesses shipping fragile or valuable items. It's a type of insurance that covers losses or damages during transit.

Carrier-provided insurance, such as the coverage offered by USPS, FedEx, or UPS, is typically included in the shipping cost, but the level of coverage may be limited. This type of insurance usually covers losses up to a certain value, such as $100.

Third-party shipping insurance, on the other hand, may be more comprehensive and cover a wider range of losses, including theft, loss, damage, vandalism, delays, and inclement weather. However, it will cost more than carrier-provided insurance.

If the value of your packages is less than $100, you may not need to purchase additional insurance, as carrier-provided insurance will already cover losses up to that value.

However, if you're shipping items worth more than $100, you'll need to declare the value and purchase additional insurance to cover the excess value. This can be done through your carrier or a third-party insurance provider.

Here's a comparison of the two types of insurance:

By understanding the different types of shipping insurance and their limitations, you can make informed decisions about how to protect your packages and minimize losses.

Domestic UPS and FedEx parcels are automatically covered up to a value of $100 against loss or damage.

The U.S. Postal Service only provides an automatic $100 of coverage on Express Mail, so if the value of your packages is less than $100, you may not need to purchase additional insurance.

If the products you're shipping are valued at less than $100, it may not make sense to purchase additional insurance.

However, if the items you regularly send are high-value, fragile, or irreplaceable, shipping insurance is probably a worthy investment.

Carrier insurance rates are slightly higher, around 3% of the declared value.

To give you an estimate, if the declared value is $1000 and the insurance rate is 3%, the cost of insurance would be $30.

Here are some common types of package protection: