I’ve seen a fair share of stuff on here about insurance questing about shipping insurance, and the options out there. Let’s Start with a consolidated thread about it.
This post will be updated as needs warrant.
This should not turn into a DHL/FedEx/Ups smashed my package; the driver took a dump on it, and they still haven’t paid my claim. I should be limited to what types are out there, how much, the options available, and smart use of the products out there for the online auction seller.
1. Types of insurance
2. Reasons to insure
3. Costs Associated with insurance
4. Claims
Types of insurance
There are three main types of insurance, and the option of not using any insurance at all.
- Carrier issued - i.e. USPS insurance, UPS insurance, FedEx Declared Value Coverage, DHL Asset Protection. This is where the carrier is the person you make the claim to
- Third Party – DSI insurance, U-PIC insurance. A third party that you pay to insure your packages, not the shipping company
- Self-insured – When a shipper does not make any claims for a damaged package to an outside entity, and they pay the replacement cost out of pocket from a designated fund. Instead of paying an outside insurer a fee for the package, the fee is placed into an account, and is used for payouts.
- No insurance – Seller pay out claim out of pocket, with no fund in place for payouts.
Reasons to insure
The main reason to insure is for the protection of the shipper, but not all cases warrant insuring. If you can easily replace the item, or refund the money without the item, then insurance may not be needed. If the damaged item would cause significant losses, insurance may be a good idea.
In short, the seller is responsible for delivery of a working item to the buyer. If the item is damaged in transit, the seller is responsible.
A person selling item purchased for $2 and sold for $55 with over 1000 in stock my choose not to purchase insurance, as if one is damaged in shipment, it can easily be replaced with one from inventory for a short loss.
Conversely, an eBay seller selling 2 Dell laptops bought for $750 each for $1000 each may want to use insurance method, as the cost to refund a laptop damaged in transit may be a drain on profit.
Costs of insurance
Carrier
USPS
- Express Mail - Insured automatically for $100 - $1 for each extra $100 in coverage
- Registered Mail – First Class or Priority Mail - Starts at $8 for first $100 - $8.85 for $100.01 to $500 - $9.70 for $500.01 to $1000 - Additional $.85 for every $1,000
- All other classes of insurable mail - $1.30 for first $50 - $2.20 for $50.01-$100 - $1.00 for each additional $100, up till $5,000
UPS
- First $100 included in rate
- $100.01-$300 $1.20 minimum
- $300.01-$50,000 $.40 per $100
FedEx Ground
- First $100 included in rate
- $100.01-$300 $1.20 minimum
- $300.01-$50,000 $.40 per $100
FedEx Express
- First $100 included in rate
- $100.01-$500 for $2.50
- Each additional $100 at $0.50
DHL Ground
- $.70 per $100
- Minimum $1.20
DHL Express
- $.70 per $100
- Minimum $2.50
Thrid Party
U-Pic - Rates located here
ii. DSI insurance – Rates located here
Claims
It is important to note, with the exception of USPS, the shipper is the one who is supposed to be paid in an insurance claim. The USPS has the option for either the shipper or the receiver of the package.
There is a huge guide on USPS claims over in the Ebay community.
If a claim is to be made, do not have the buyer re-ship the product back to you, the seller. Your claim wil be denied 99.99% of the time, as the carrier will claim the damage might have occured in return shipment.
I suggest you read it, it can be good for other carriers. Remember the USPS has rules it must follow. The others are private insurers, who can bend the rules at times. Persistance is your friend.
For the carrier insurance, most claims require the package be given to the carrier for inspection. DO NOT THROW AWAY DAMAGED PACKAGING UNTIL THE CLAIM IS SETTLED.
The third party insurance will pay out if the deductible for the carrier is reached – i.e. you sell a laptop and insure it with a third party, and ship it via UPS. UPS damages it, and pays out a $100 claim. The third party should pay the balance (item cost -$100).
The amount paid will be the amount paid for the item, plus the cost of shipping the item. For example, if I sell a widget for $400, and charge shipping of $100, but it only costs me $50 to ship said item, the most an insurance claim should pay would be $400 + $50 = $450.
