A Comprehensive Guide On Shipping Insurance For E-Commerce Businesses

a comprehensive guide on shipping insurance

Shipping is the heartbeat of e-commerce and retail business. Yearly, billions of parcels or shipped to different places, national and international. Transit facilities enable businesses to reach customers worldwide. However, shipping is filled with risks. Packages can be damaged, lost, or mishandled during transit. These repercussions pose a grave challenge for businesses. That is why shipping insurance is launched by companies to compensate for the loss. This insurance acts as a protective shield for e-commerce entities against potential losses. This manual makes it easy to file a claim, return your money, and many more. Let us begin. 

international shipping cost

What is Shipping Insurance?

Shipping insurance is a service carriers or third-party vendors provide to safeguard packages in case of damage, theft, loss, or mishandling during transit. It refunds the shipper for the declared value of items in the package, offering financial protection for businesses shipping valuable or delicate items.

How Does Shipping Insurance Work?

The process starts during package planning. Some carriers like FedEx and UPS include coverage for up to $100 in declared value liability on every parcel, while additional coverage requires a purchase. When an issue arises during transit, a claim must be filed, typically requiring shipping information, receipts, and proof of declared item value.

  • Filing a Claim with UPS

Claims are filed online within 60 days of the scheduled delivery date, requiring package details, relationship to the package, additional documentation, photos of damage (if applicable), and online claim tracking.

  • Filing a Claim with FedEx

Claims are filed online within 60 days of the shipment date, involving form completion, supporting documentation upload, review, submission, possible inspection, and online claim tracking.

  • Filing a Claim with USPS

Claims can be filed online or by mail, each USPS service having specific filing periods. Necessary documentation includes mailing receipts, insurance proof, item value proof, and damage evidence. Appeals are possible if a claim is denied.

What Does Shipping Insurance Cover?

Insurance covers various transit-related mishaps such as delivery delays, item damage, payment failure on delivery, and other uncontrollable issues. Coverage varies by carrier, with automatic coverage ranging up to $100 for major carriers like UPS, FedEx, and USPS.

Shipping Insurance Costs and Considerations

The cost of shipping insurance varies based on carrier, service, and item value. Carriers like UPS and FedEx offer tiered pricing based on declared value, while USPS charges based on ranges of declared value.

  • USPS Insurance Cost

usps insurance cost

  • FedEx Insurance Costs

fedex insurance cost

  • UPS Insurance Costs

ups insurance cost

Is Transit Insurance Necessary?

While not mandatory, it offers a safety net, particularly for high-volume or high-value shipments. Reports show a significant percentage of packages encounter issues during transit, making insurance a smart investment to protect against potential losses.

Why Transit Insurance Matters for E-commerce?

E-commerce businesses face challenges when packages are damaged or lost in transit. Insurance in shipping acts as a savior, ensuring businesses don’t bear the financial burden of such occurrences. It prevents potential profit losses and maintains customer satisfaction by covering the cost of damaged or undelivered packages.

The Benefits of Shipping Insurance for E-commerce

In the dynamic world of e-commerce, safeguarding shipments is paramount, and mailing insurance emerges as a pivotal asset for numerous reasons:

  • Protection Against Loss and Damage

Insurance serves as a protective shield, shielding shipments from the common pitfalls of loss and damage during transit. Shipping involves intricate processes where packages can fall victim to loss or damage. Alarming statistics indicate that 11-15% of packages encounter such issues annually in the U.S. With insurance, these incidents remain isolated, shielding your business from potential harm.

  • Accessibility and Invaluable Safeguard

Shipping insurance is as effortless as an additional fee to your shipping costs, necessitating minimal paperwork. Despite its ease of getting, it stands as a crucial asset. It not only shields your business against losses and damages but also aids in assuaging customer dissatisfaction and upholding brand reputation.

  • A Source of Steady Peace of Mind

In the labyrinth of daily business operations, mitigating significant losses due to damage or shortage is imperative. A comprehensive understanding of carrier options and meticulous documentation ensures that your insurance plan becomes a cornerstone of your shipping procedures, providing the tranquility essential for business operations.

  • Ensures Financial Security

Lost or damaged shipments can inflict substantial financial burdens, especially for high-value or fragile items. E-commerce businesses are estimated to lose around $500K annually due to lost and damaged packages. This insurance acts as a financial shield, covering the declared value of shipments and preventing businesses from bearing the brunt of these costs.

  • Mitigating Unforeseen Risks

Despite business preparedness, unforeseen events like theft, natural disasters, or post-purchase accidents pose looming threats. By insuring packages, businesses fortify themselves against significant financial losses stemming from uncontrollable circumstances, ensuring resilience even in the face of unforeseen adversities.

Exploring Shipping Insurance Options

When considering shipping insurance, two primary options are available:

  • Carrier Insurance

Shipping carriers such as FedEx, UPS, and USPS offer insurance as an add-on service. While convenient, carrier insurance may have limitations in coverage and reimbursement.

  • Third-Party Insurance

Specialized third-party providers offer broader coverage options, flexibility, and cost-effectiveness, making them an attractive choice for businesses with frequent shipments.

Keep Your Items Safe and Secure In Versatile Shipping Boxes

You know shipping is a hard and harsh topic. Millions of the valuables got damaged, mishandled, and lost during the transit process. To cope with it, Custom Designs Boxes creates strong and durable shipping boxes that keep products safe and secure, securing you from mishaps and hefty losses of amounts. Mailer boxes are made from strong materials and designed with printing, easy-to-detect logos,s, and color configurations, displaying your products distinctly. Get Custom Shipping Boxes from us and diminish the chances of loss and damage.


Shipping insurance is a crucial safety measure for e-commerce businesses, mitigating the risks associated with transit-related mishaps. While it involves additional costs, the protection it offers is invaluable. Understanding carrier-specific processes and costs enables businesses to make informed decisions regarding their insurance needs. Ultimately, it is a strategic investment to secure the reliability and reputation of an e-commerce business. Start insurance for shipping on your commodities to mitigate the higher risks in the future.

Related Posts

Find the perfect packaging solutions tailored to your industry niche.

Order a Sample Kit

Don't just imagine – experience excellence up close, as you can check our superior craftsmanship before making your decision by ordering your sample kit.