Why Do I Need Shipping Insurance?
by Jillian Voege
April 19, 2017
So why do you need shipping insurance?
Because nobody in this world is perfect, especially during rush periods. For example, UPS reported a 83% on-time delivery rate during the holidays a few years ago. That's 17% of UPS' total holiday workload, either delayed, misdirected, or simply gone.
And just because a carrier can get a package somewhere on time, there are minimal guarantees that the items will be in working condition. One study concluded that around 9% of packages come damaged, and 5% of those damaged packages had irreparably damaged goods inside. These packages get put through the ringer when they enter the mailstream - sliding around on conveyors, being tossed inside trucks by laborers, etc. Now, some packages are covered by a declared use policy, which most of the major carriers automatically apply to most packages. Depending on the carrier and the service level, the package can be covered from anywhere between $50-$100 of the package's declared value.
But if you ship high-ticket items like electronics or jewelry, a $100 declared value policy won't be nearly enough to cover the cost of your damaged goods. If your business relies on high-cost goods for the majority of your revenue, you should already know that a handful of damaged packages could be substantially harmful to your bottom line.
So now that you know why, how do you get shipping insurance?
There are many different vendors of shipping insurance, from your carrier to third-party insurance providers (like EasyPost). But their value is strictly defined by their ease of use. If you're paying a premium for a policy that has too many stipulations or restrictions on reimbursement, you're paying extra money for unreliable coverage. Most providers will lengthen the claims process and introduce too many hoops to make the insurance worth it.
That's why we approach insurance differently. EasyPost provides full coverage of a package for just 1% of the package's value as a premium. We also make our claims process as quick as possible (claims repaid within 30 days), and make it easy to automate coverage purchases so you can easily cover your most valuable shipments without manual touchpoints.
In an age where customers are increasingly reliant on eCommerce, there should be contingencies in place to protect both the business and the customer from unfortunate happenstance that can damage, destroy, or disappear a package. We understand that such contingencies are only valuable to your business if they actually work as advertised.