Is it worth buying shipping insurance in 2022?
One of the biggest worries of customers and companies alike is a package getting damaged before it reaches the customer. A recent survey found that 53% of shoppers expect expedited shipping on damaged packages, and 43% of them expect discounts or exchanges for their damaged products. This means that many e-commerce businesses sustain losses when this happens. This is why you need shipping insurance.
But what is shipping insurance, and what does it cost? Is it worth it? We have all the answers for you.
What is shipping insurance?
Shipping insurance is a service that can mitigate the risk of losing money from replacing/refunding lost, damaged, or broken shipments. If by any chance an insured package is lost/damaged during delivery, the shipper is eligible to file for a reimbursement on the declared value of the items. It is a gamble for brands to ship goods blindly from the manufacturer to customers globally without knowing possible risks until the package arrives. Shipping insurance helps them mitigate that risk.
Who should buy shipping insurance (buyer or seller)?
Generally, the seller is the one who purchases the insurance for the shipments since they are the ones who are responsible for the product until delivery and will incur monetary losses if anything goes away.
e-commerce that ended up losing money because they had to reship and no insurance? But in certain circumstances, a buyer might want to buy additional insurance, for example, if delivery is to a location where packages are less secure or the consignment is of significant importance to them.
What Are the Risks of Shipping Without a Shipping Insurance?
To e-commerce businesses, the main risk of shipping without insurance is theft or loss of parcels, product damage, costs of shipping returns from damaged parcels and the cost of “re-shipping” stolen, lost or damaged parcels. While lower value goods may be less affected, higher value or high volume goods will see these losses adding up. In addition, events like the pandemic and supply chain interruptions in China can add to delays and discord. Shipping issues can be an expensive proposition for e-commerce brands and by buying shipping insurance, they can safeguard themselves against it.
What Are the Advantages of Shipping Insurance?
Peace of mind
There is nothing you can do after your merchandise is shipped. But if you have insurance, it will allow you to be less stressed about your products. Even if something happens to your packages, you’ll still be able to reimburse your package’s worth and cut your losses. Worry less, ship more!
No replacement/refund costs
If you go on without insurance, you will need to cover the losses from your own pocket in case something happens to the parcel. These costs can add up, especially if you ship a lot of products. But with insurance, these losses will go to the shipping company.
Easy application
For the aforementioned carriers, applying for shipping insurance is simple and easy. You just need to declare the value of your goods and the charges will be added to your shipping cost right away. Just in one click, you can ensure your products will be in safe hands.
Why is Flosurance worth it?
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- One platform for multiple solutions
Inbound, order fulfillment, shipping, returns & now Shipping Insurance. Coordinate & manage every component of your e-commerce fulfillment via Floship Logistics Platform - Global shipping protection
Domestic or international, provide your global customers a peace of mind and assurance when they purchase from your e-commerce store. - Flexible shipping insurance
Flexible shipping Insurance tailored to suit your specific shipping needs and coverage of damage, a lot of stolen goods. - Covers all the risks addressed above
- One platform for multiple solutions
How Much Does Shipping Insurance Cost?
Shipping insurance cost varies between each company. Here are the insurance costs for the 3 most frequently used shipping companies:
The cover starts when parcel(s) leave their originating address and ends when they are received by the intended recipient at the delivery address. The coverage amount is equal to your order value (i.e. sale price) and starts when parcels leave their originating address. The protection can be canceled anytime before the parcel leaves the originating address
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Cost Calculation:
If your order is declared at US$150 (Product value + Shipping Cost), with the rate of 1%, Your shipping insurance rate would be USD 150 * 1% = USD 1.5 / per order Your coverage would be 100% of the declared value, which would be USD 150 in this example.
More Details: https://www.floship.com/solutions/shipping-insurance/
2. USPS
| Declared Value | Insurance Cost |
| $0 – $50 | $2.45 |
| $50.01 – $100 | $3.15 |
| $100.01 – $200 | $3.85 |
| $200.01 – $300 | $5.05 |
| $300.01 – $400 | $6.40 |
| $400.01 – $500 | $7.63 |
| $500.01 – $600 | $10.35 |
| $600.01 – $5000 (maximum liability = $5000) |
$10.35 plus $1.55 per $100.00 or fraction thereof over $600 in declared value |
Without a declaration of value, USPS only provides $100 insurance for the Priority Mail Express service.
| Applicable Services | Charges |
| U.S. Express Package Services, U.S. Ground Services, International Ground Service |
-$3.45 for shipments valued between $100.01–$300 -$1.15 per $100 of declared value for shipments valued in excess of $300 |
| International Express Package Services, International Express Freight Services |
$1.15 per $100 of value in excess of $100 or $9.07 per lb., whichever is greater |
| U.S. Express Freight Services | $1.15 per $100 of value in excess of $100 or $1.15 per lb., whichever is greater |
FedEx has an upper limit of $1000 declared value for certain goods, such as plasma TV and artworks. You can see the details on the FedEx official website.
Without a declaration of value, UPS’ liability is limited to $100 for both domestic and international shipments.
Note that the figures above are Declared Value of Carriages and NOT insurance. They are the liabilities that the carriers will cover in the event of a lost/damaged shipment. If you want to insure your packages above the declared value, you will need to buy additional shipping insurance from a third party/insurance broker yourself.
Conclusion
If you decide on insuring your packages, you need to pay attention to several details on the insurance policy of your chosen courier. Given the events of the past two years, it is more important now than ever before for companies to protect themselves. 2022 presents its own challenges for the logistics world, however, with Flosurance by Floship, our customers can insure their shipments with total shipping protection that includes protection for lost, stolen or damaged parcels. To know more, speak to an expert to get your doubts cleared today.
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