What is shipping insurance?

Before we being, let’s answer the main question – what exactly is shipping insurance? Shipping insurance is a service that reimburses some or all of the delivery fees and the value of a shipment should it become damaged or lost in transit. It can be a service included by default with shipping charges or as an additional charge through the carrier or a third-party insurance provider.

While insurance is always advisable, you don’t always have to purchase it as an additional charge. Many services provide insurance on parcels up to a certain declared value. If the contents of your shipment are within the default coverage, your package is insured at no extra cost.

Multiple ways to insure your parcel

1) Carried Insurance: Carrier insurance is provided by the carrier that ships the package. Costs typically range between £0.70-0.80 for every £100 increment of its declared value over the default insured amount.

2) Third-party insurance: A great way to save on shipping insurance is to use a third-party insurance provider. These are companies that do not ship parcels themselves, but instead offer shipping insurance for an item’s declared value.

An advantage of using a third-party shipping insurance provider is that their rates are often competitive in order to attract customers away from using carrier insurance.

3) Self-insurance: Self-insuring is when you “take matters into your own hands” by insuring the packages yourself. By adding an optional additional charge at checkout, you’re stating that if a package goes missing or is damaged, you will handle the claims process instead of an insurance provider.

Keeping prices low enough that it looks attractive to customers, while not making it so low that you lose money in the event of replacements, can be tricky. Therefore, it may be best to offer rates similar to those available through carriers.

Downsides of self-insuring are that it requires a lot of patience, support, and firmness when dealing with claims. It is also more optimized for items that are easily replaceable. If you sell antique lamps, probably forego this suggestion.

Is shipping insurance worth it?

It’s important to remember that when you apply shipping insurance to a shipment, the provider will charge you regardless of if what you’re shipping is approved or if it’s going to an ineligible destination. So, if you ship a laptop to Congo, and it gets lost or stolen on the way, not only would your claim not be accepted, you’d be out the money you paid for insurance. Because of this, you need to be aware of certain restrictions when shipping.

Also, if you sell unique items or high-value electronics you’ll want to verify that any insurer you use will cover the full value of your items without having to upgrade to more premium services



Shipping internationally takes planning. When shipping to foreign countries, you need to make sure that you’re not shipping prohibited materials or items. Sometimes, the prohibited items can be surprising. For instance, Italy has sensible restrictions: They don’t allow you to import leeches. However, some are more confounding: Exposed film or shoes. If your items don’t clear customs when shipping prohibited materials, your shipping insurance is void.

Furthermore, there are countries that certain insurers do not allow coverage to: Afghanistan, Angola, Bolivia, Burma, Congo, Cuba, Iran, Iraq, Ivory Coast (Cote d’Ivoire), Liberia, Nigeria, North Korea, Paraguay, Sierra Leone, Somalia, Sudan, Syria, Venezuela.

Also, please keep in mind that certain countries allow coverage, but as soon as the airplane or ship touches down into these countries, coverage ceases. This includes but is not limited to: Russia and other Commonwealth of Independent States (including Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Russian Federation, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan).

What exactly is covered by shipping insurance?


When a shipment arrived damaged, verify that the shipping insurance provider wants the recipient to keep the package before awaiting next steps. Again, do not request the package to be returned to you or a repair technician, etc. until the insurance provider authorizes you and the customer to. Coordinate with the recipient as needed to provide photos of the damage to the packaging and contents within.

Contrast this with photos of the packaging and contents in their normal condition. A written statement from the recipient detailing the “unboxing” process, etc. and information about the damage is also great supplementary information to have. This information helps expedite the claims process.

As the seller, it’s important you supply the carrier with documentation that supports the actual repair and/or replacement cost of the damaged merchandise. This documentation, which may be provided either when the damage is first reported or after a notification is issued, can usually be uploaded online. Supplementary documentation that can help expedite or reinforce your claims of damage are documents such as original invoices, purchase orders, or other information requested by the carrier.


How can a package actually get lost? And when is it considered lost? When you and/or your customer is tracking a package and notice it’s no longer moving and never arrives, you’ll want to submit a missing mail request. Information needed for this is generally includes:

-Sender mailing address

-Recipient mailing address

-Size and type of packaging used

-Identifying information such as Tracking number(s), the mailing date from the mailing receipt

-Description of the contents such as what it is and the brand, model, color, or size, if applicable

-Pictures that assist the carrier in locating and identifying the package

If the package is found, next steps will be issued via email.


What does stolen actually mean? Well, if a package was stolen after being marked as delivered, it’s rare that reimbursement will be issued. Most of what can be done here is to take preventative measures between you, your customers, and the carrier. Also, the steps for filing a claim will more or less match the steps for a package lost in transit. The only additional documentation that would be required would be information detailing the delivery notifications from the carrier and anything sent from you as a seller.

If the package is being sent to a residential address, try to recommend adding signature confirmation to avoid the risk.