Shipping Insurance Guide: Protecting Your Packages

Shipping insurance protects both sellers and buyers when packages are lost, damaged, or stolen. Understanding your options helps you make smart decisions about protecting shipments without overspending. This guide covers everything you need to know about shipping insurance.

Understanding Shipping Insurance

What It Covers

Typical coverage:

• Lost packages
• Damaged contents
• Theft/pilferage
• Weather damage
• Carrier mishandling

What's usually not covered:

• Normal wear during transit
• Improper packaging
• Prohibited items
• Pre-existing damage
• Concealed damage (sometimes)

Who Needs Insurance

Always insure:

• High-value items ($100+)
• Fragile items
• One-of-a-kind products
• Electronics
• Artwork and collectibles

Consider insuring:

• Items over $50
• Gifts with emotional value
• Holiday shipments
• International packages

Carrier Insurance Options

USPS Insurance

Included coverage:

• Priority Mail Express: Up to $100
• Priority Mail: Up to $100
• First-Class: None included
• Ground Advantage: Up to $100

Additional coverage costs:

• $0-$50: ~$2.70
• $50.01-$100: ~$3.45
• $100.01-$200: ~$4.60
• Above $200: Variable rates

UPS Declared Value

Important distinction:

• Not insurance, but liability coverage
• Based on declared value
• Limitations apply

Included coverage:

• Up to $100 included
• Additional coverage available
• Rates vary by value

FedEx Declared Value

Similar to UPS:

• $100 included on most services
• Additional coverage purchasable
• Subject to terms and conditions

Third-Party Insurance

Why Use Third-Party

Advantages:

• Often cheaper than carrier
• Broader coverage options
• Easier claims process
• Multi-carrier coverage

Popular providers:

• Shipsurance
• U-PIC
• Parcel Guard
• SecurShip

Cost Comparison

Typical third-party rates:

• $0.50-$0.70 per $100 of coverage
• Often 50%+ cheaper than carriers
• Bulk discounts available
• Integrated with shipping software

Self-Insurance Strategy

When to Self-Insure

Makes sense when:

• High shipping volume
• Mostly low-value items
• Good damage/loss history
• Can absorb occasional losses

How it works:

• Set aside percentage of shipping cost
• Cover claims from reserve fund
• Track actual loss rate
• Adjust reserve as needed

Calculating Self-Insurance

Example calculation:

• Monthly shipments: 1,000
• Average value: $50
• Loss rate: 0.5%
• Expected losses: $250/month
• Reserve: 1% of shipment value = $500/month

Filing Claims

Documentation Needed

Gather before filing:

• Tracking number
• Proof of value (invoice, receipt)
• Photos of damage
• Photos of packaging
• Delivery confirmation
• Original shipping receipt

Claim Process

General steps:

Report issue promptly

Gather documentation

File claim with carrier/insurer

Provide additional info if requested

Follow up on status

Receive settlement

Time Limits

Act quickly:

• USPS: Must file within 60 days
• UPS: 60 days
• FedEx: 21 days
• Third-party: Varies by provider

Claim Tips

Improve success rate:

• File immediately when eligible
• Document everything with photos
• Keep all packaging materials
• Be thorough and accurate
• Follow up regularly

Best Practices

Insurance Decisions by Product

Packaging for Claims

Better packaging = better claims:

• Use appropriate materials
• Document packing process
• Meet carrier requirements
• Photo before sealing

Key Takeaways

Know included coverage: Many services include some protection

Compare options: Third-party often cheaper

Consider self-insurance: For high-volume, low-value

Document everything: Photos are essential for claims

File promptly: Time limits are strict

Package properly: Protects goods and claims

Shipping insurance is a balance between protection and cost. Make smart decisions based on item value, fragility, and your loss history.