5 Common Questions About Shipping Insurance, Answered

Although shipping carriers strive to be as reliable and efficient as possible, no one is perfect. Sometimes packages get lost or damaged in transit, especially when they are shipped long distances and go through multiple sorting centers. Of course, people whose packages have been damaged or lost would want to get reimbursed, and that’s why shipping insurance exists. Today, PostageMaker will answer 5 common questions about shipping insurance.

What Is Shipping Insurance?

Shipping insurance, also referred to as postage insurance, is a type of insurance designed to reimburse senders for damage, loss or theft of their parcels. Postal services and courier companies typically offer insurance for most types of shipments. Additionally, there is the option of buying additional and/or third-party insurance for long-distance, fragile or expensive parcels (just to be on the safe side).

Are All Parcels Automatically Covered?

Postal services and courier companies often include insurance in the shipping cost, but this isn’t always the case. For example, USPS Priority Mail and Priority Mail Express shipments are covered automatically for up to $50 and $100 of insurance, respectively. Similarly, the shipping cost of FedEx and UPS domestic parcels includes coverage against loss or damage for up to $100. Economy-class parcels are typically not insured.

Technically, this automatic coverage factored into the shipping cost is not shipping insurance, but declared value coverage. If your parcel is worth more than $100 but you haven’t declared its value, you won’t be reimbursed more than a hundred bucks.

Luckily, shipping carriers usually allow to purchase additional insurance coverage for expensive or fragile items. The insurance fee usually depends on the actual value of the parcel contents. However, you should keep in mind that certain items may not be insured. They include, for example, items that are so fragile that they cannot be mailed safely regardless of packaging.

Are There Any Pitfalls When It Comes to Shipping Insurance?

Just like with any insurance, you need to read the fine print of your policy to be sure how much reimbursement you’ll get if your package gets damaged, lost or stolen in transit and why your insurance claim might be denied. For example, you won’t be reimbursed for damaged fragile items if you haven’t packed them properly and have forgotten to label your parcel as fragile.

As we’ve already mentioned above, some items are not subject to insurance coverage. In addition to extremely fragile items, non-insurable items include currency, coins, and precious stones. Each postal service and shipping company has its own list of non-insurable items you should check out before shipping anything.

Sometimes carriers allow to insure items such as artwork, antiques and expensive consumer electronics, but coverage is limited to a maximum declared value specified by the carrier.

Is It Possible to Purchase Third-Party Insurance?

If you’re not satisfied with the insurance options offered by the carrier, you can purchase shipping insurance from a third-party company. Some online stores, for example, may offer you to pay for extra insurance during the checkout process. You can also buy shipping insurance directly from an insurance company.

Third-party insurers may insure goods that are not insured by carriers, for example, economy-class parcels, and they generally have less restrictions than first-party shipping insurance. Such insurance may be cheaper than the default shipping insurance offered by carriers; in addition, third-party insurers may have a higher declared value threshold for insurance coverage than shipping carriers.

How to File an Insurance Claim?

Don’t expect to be reimbursed automatically if someone happens to your package; in fact, the carrier won’t know that your package has been damaged, lost or stolen unless you inform them about it. To get a reimbursement, you need to file an insurance claim with the postal service or courier company (or with your third-party insurer).

If your package has been damaged, you can file your claim as soon as your discover the damage. If you suspect that your shipment has been lost or stolen, you can file a claim once a certain period of time has passed since the expected delivery date. It can range from 24 hours to 7 business days, depending on the carrier and type of service.

But don’t wait too long, because most carriers require to file an insurance claim within 6 to 9 months of the mailing date; once the insurance claim filing deadline has passed, you won’t get reimbursed.

An insurance claim needs to be filed by the person who has purchased insurance coverage (policyholder); it is usually the sender, but not necessarily. Your insurance provider will likely ask you to support your claim with as much evidence documentation as you can gather, including proof of insurance, proof of value (sales receipt, paid invoice, computer printout of the online transaction), proof of damage or loss, a detailed description of your package and the items inside, etc.

It is highly recommended to take photos of the goods and the package before mailing fragile and expensive items, so that if someone happens to them you have proof that they have been damaged in transit to support your insurance claim.

Please, keep in mind that shipping insurance cases take time to get resolved. Policyholders usually have to wait for 3 to 7 business days after submitting supporting documentation to UPS or FedEx; the USPS may require up to 30 days to resolve an insurance case.