Shipping Insurance Guide: Coverage and Costs

Virginia Miller

June 14, 2024

In this article

Shipping insurance is an important topic for eCommerce businesses to understand. According to studies, around 1.7 million shipments are stolen or damaged daily. Without shipping insurance, the companies responsible for these packages would be unable to recover from such losses.

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Coverage and costs can vary greatly, so it's important to know what options are available and how to best protect your products during transit. In this guide, we'll provide an overview of shipping insurance and outline the different types of coverage available

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What Is Shipping Insurance?

Shipping insurance is an additional policy that senders can purchase to protect packages against loss or damage during shipping. Most carriers, like UPS, FedEx, and USPS, offer shipping insurance for an extra fee.

If a package is lost or damaged, shipping insurance reimburses the sender for the cost of the items and materials. Policies may also cover the shipping costs. Some providers even offer coverage for the value of items up to a specified limit.

Who Needs Shipping Insurance?

Shipping insurance can benefit any individual or business that frequently ships items, especially valuable or fragile goods. It is particularly important for:

eCommerce Companies

eCommerce retailers rely on successful delivery to operate. Shipping insurance protects against financial losses if orders are lost or damaged.

Manufacturers and Distributors

Companies that produce and distribute expensive inventory can insure their shipments to protect against damages during transit.

International Shipments

Long distance and international shipping carries more risk. Insurance provides coverage for packages crossing borders or traveling overseas.

Benefits of Shipping Insurance

Key advantages of purchasing shipping insurance include:

Financial Protection

Insurance covers replacements and repairs if items are lost or damaged.

Peace of Mind

Knowing shipments are insured eases worries about potential issues.

Customer Satisfaction

Insurance shows customers their orders will be protected if problems arise.

How to File an Insurance Claim

To submit a shipping insurance claim:

Gather Documentation

Have order details, receipts, invoices, and tracking info ready.

Contact the Insurer

Inform them of the loss or damage and follow their claims process.

Follow Up with the Carrier

Check if the shipping provider offers any additional compensation.

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FAQs

What is shipping insurance and why is it important?

Shipping insurance protects the value of packages in case they are lost, damaged, or stolen during transit. It provides financial protection and peace of mind for both sellers and buyers.

How much does shipping insurance cost?

Shipping insurance rates vary by carrier, value of items, and destination. Expect to pay 1.5-4% of the shipment's value. Get quotes from multiple providers.

When should I buy shipping insurance?

If you regularly ship valuable, sensitive or important items, shipping insurance is highly recommended to protect against potential losses from damage.

What does shipping insurance cover?

Policies typically cover the item's value, shipping charges, and packing materials in case of loss/damage. Some also cover theft. Check policy details for exclusions.

How do I file an insurance claim?

Save all paperwork related to the shipment. Contact the insurer to start a claim. Provide necessary documentation and details on damage/loss. The insurer investigates and issues reimbursements.

How do I choose the right shipping insurance?

Consider coverage amount, provider reputation, goods type, transport mode, shipment value and origin/destination to select the ideal policy for your needs.

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