Shipping insurance can protect your brand and your profits by providing coverage for lost or damaged packages. Whether you are shipping or receiving items, this lesser-known coverage can help replace lost or damaged packages.
By Lisa Lash
A lost or damaged package can disrupt your business operations, and lead to unsatisfied customers, negative reviews and expensive replacement costs.
Shipping insurance – also known as parcel insurance – can’t prevent your packages from getting lost, but it can shield you from costly replacement expenses. Shipping insurance also protects your financial interests by delivering at least 50% savings over coverage from shipping carriers at the point of sale (POS).
While import volumes are below the record-setting levels that sparked port congestion, shipping backups and wayward packages at the height of the pandemic, volumes are still higher than pre-pandemic levels. Higher volumes can lead to more lost or damaged packages, making shipping insurance a more important investment than ever to protect your business and your reputation.
Who is parcel insurance for?
If your business ships lower-priced items, such as t-shirts valued at $5, the automatic coverage of up to $100 available through UPS, FedEx, USPS and other carriers at the POS may be enough coverage.
It’s companies that ship or receive a high volume of goods, typically at least 3-5 packages a day, at an individual value of $100 or more, that can benefit most from parcel insurance. That’s because it is more cost-effective and covers more than what is automatically available at the POS from a shipping company. In fact, parcel insurance can cost 50% less than coverage available at the POS.
What does parcel insurance cover?
Not everyone is aware that parcel insurance is available as an alternative to POS coverage. If your company ships a high volume of goods, obtaining parcel insurance can provide a competitive advantage because the cost for parcel insurance is based only on the value of the items you ship, not the size or weight of each package. Insurance costs are also not based on a set monthly premium. You pay only for each box shipped.
Shipping insurance can cover high-cost goods, including the following items:
- Cell phones
Commodities not usually covered by parcel insurance include gift cards, lottery tickets, game tickets, loose diamonds or stones, and personal or gift items shipped by employees. Parcel insurance also does not cover items delayed in transit, or fraudulent claims.
How does parcel insurance work?
Parcel insurance coverage is right-sized. Therefore, your monthly coverage costs are based only on the value of what you ship each month, based directly on your manifest report. For example, if you ship more items during the holiday season, your parcel insurance costs will be higher at that time than the months when you ship less.
Parcel coverage safeguards against lost or damaged items and can also cover items shipped to you. Insurance providers simply need to know the industry you’re in and the types of goods that you typically ship. Since international buyers tend to lose parcels more frequently, this coverage can be especially valuable for global shipping.
Any drastic changes to what you typically ship must be reported to your shipping insurance provider. For example, if your business typically ships customer packages and then when participating in a tradeshow, you need to ship items to the event, such as six big-screen TVs and a display and other high-value items, you would need to report the different types of items being shipped to ensure coverage.
What are some common parcel insurance claims?
Packaging items well and tracking delivery can help avoid claims, but mishaps still happen even to the most careful shippers. Here are two common claims scenarios:
- The delivery that disappeared. This typically involves a misdelivered package. The buyer didn’t receive the package, even if there’s a delivery scan. In this scenario, shipping insurance covers the cost of refunding the buyer if they really didn’t receive the item.
- The dropped and damaged delivery. Often, a box will fall and damage the contents, such as the glass on an electronics screen. Other times, it could be a rare item that breaks, such as a set of expensive china or pottery. Shipping insurance offers protection when contents are damaged.
How long does it take to get started?
Businesses can start using their Parcel Insurance on the same day they obtain it, and most insurance providers can provide you a quote and issue a policy in one day as well. After uploading the free software from your parcel insurance provider to integrate with the manifest shipping software, your insurance provider will have access to your packages shipped and can begin your coverage.
For more information about parcel shipping insurance, contact Parcel Insurance Plan.