Types of Shipping Insurance in 2022
- What is Shipping Insurance?
- What are the Different Types of Shipping Insurance?
- What are the Features of Shipping Insurance?
- Who is Responsible for Shipping Insurance?
- How Does Shipping Insurance Work?
- How Much Does Shipping Insurance Typically Cost?
- Does Shipping Insurance Include the Cost of Shipping?
- Who Does Shipping Insurance Protect and Cover?
- What are the Benefits of Shipping Insurance?
After losing her job due to the pandemic, like many others, Alice decided to set up an eCommerce store, a venture currently trending with everyone purchasing goods and services online. 85% of her orders sustained damage during transit. She skipped shipping insurance and eventually lost all her savings on reimbursing angry customers, losing her business’ reputation in the market.
You can avoid making the same mistakes as Alice by reading this article on “Different types of shipping insurance.” Selling products online is about setting up a medium, payment portal, and delivering goods to customers. Here delivering being the last and most integral part, more emphasis has to be given to it. Nobody likes to pay for broken goods. What can someone do in this situation? Lose goodwill or focus on the shipping part?
In such a situation, the weapon to rescue is shipping insurance. This article aims to explain the concept of shipping insurance in a simplistic way.
What is Shipping Insurance?
In simplest terms, shipping insurance, also known as marine insurance, is the protective measure for securing products for shipment. Shipping insurance can safeguard goods from various tragic events that typically may include larceny, deterioration, inappropriate handling, etc. The insurer will bear the financial burden for such goods until they reach the specified shipping site.
It is not an easy task as shipping involves multiple stages and processes that have to take place, and there it is essential to have a safety net for an event where even one thing out of all the procedures might go wrong. In cases of goods getting damaged, the seller will have to forgo revenue and focus on refunding the amount or sending another set. To sum it up, shipping insurance is a form of assistance that will protect the seller from parcels that may be stolen, vandalized, or misplaced.
What are the Different Types of Shipping Insurance?
Among the different types of shipping insurances available on the market, the choice of insurance depends on the situation and needs of the individual. Each shipping insurance has its advantages and disadvantages.
The most preferred out of different shipping insurances. It is usually furnished by the shipping corporation. In this type of shipping insurance, an insurance provider or company is behind the coverage of the policy having the financial resources to back it up. It is the issuer of the policy and the one who charges the premium and pays for losses and claims covered under the policy.
Here the insurance company pledges to pay the insured for the financial losses which are covered under the applicable claims scenarios and charges a hefty premium for this service. But it is very crucial to view the terms and conditions of the policy beforehand.
With the advent of shipping insurances providers on the rise, this type of insurance is becoming popular. Here, a third-party insurer bears full accountability for the package and will cover the expenditures for refunds or replacements.
With a third-party insurer, you can be assured that the processing time for claims will be much lesser. Regardless, out-of-the-pocket costs could quickly add up, making it more expensive.
Finally, the last option is self-insurance. The most cost-effective type of insurance protects packages shipped through carriers and delivers more comprehensive security at lesser prices.
What are the Features of Shipping Insurance?
With increased online sales comes an increase in shipping insurances options for e-commerce businesses and online merchants to use to their advantage. The circumstances that are covered by these insurances will differ widely depending on the insurance policy chosen and the shipping company that is providing the services.
Generally, these insurances protects occurrences in which the seller has no power, such as uncertainty or delay in delivery, harm to cargo, etc. Each provider has distinctive requirements, conditions, limitations on goods, and other unusual coverage details that sellers need to evaluate before selecting an insurance provider for their goods.
Who is Responsible for Shipping Insurance?
When the question arises about who is responsible for shipping insurance, various factors come into play. Nevertheless, the answer depends on the fine print, i.e., Terms and Conditions.
An event with no coverage could result in the claim being denied, or insurance may be restricted when high-value items are covered. There may also be restrictions on particular destinations. There are different terms for National (Low-risk) and International orders (High-Risk).
How Does Shipping Insurance Work?
So, what if your goods were damaged or misplaced?
Not to worry!
Simply file a claim to receive compensation for its monetary losses.
Claims can be made by various means, both online and offline. It purely depends on the carrier under a specified time frame. If the time limit has lapsed, there is an unlikely chance of the claim being heard.
For proof, documentation can be supplied, such as a certificate of insurance, shipping tag, photographs of any damage, or any other proof to help speed up the process. But in the end, the time to process the claims will rely on the insurance provider, resulting in one of three outcomes: claim fully approved, partially approved, or denied.
If insurance claims are approved, funds are refunded promptly. Nevertheless, if a claim is denied, the reasons for denial will be shared, and an appeal can be filed. Every insurance carrier will have its regulations for claim processes.
How Much Does Shipping Insurance Typically Cost?
Various shipping companies offer insurance, so it’s challenging to come up with a specific insurance rate. The cost can vary per company depending on the package sent and the frequency of shipments. If deciding to approach any carrier or third-party insurance provider, anyone can expect the average cost to be 1.5% to 4% of the object’s value to be delivered.
Does Shipping Insurance Include the Cost of Shipping?
A lot of consumers do not believe in the concept of shipping insurance. As a measure, insurance can be included in the delivery amount or counted as a value-added service. It is very convenient nowadays to add shipping insurance to the package.
Who Does Shipping Insurance Protect and Cover?
The insurance company provides protection to the seller for any losses that may be incurred on his/her goods during the transportation. As to what comes under the purview of shipping insurance, it purely depends on the value of goods and the carrier company. The conditions that will be covered by shipping insurance will vary widely based on the shipping insurance policy selected and the shipping company that is supplying the services.
Generally, shipping insurance protects against incidents in which the seller has no control, such as delivery delays, damage to goods, or shipping malpractices that take place prior to the delivery. More information can be found on the carriers’ websites for DHL, USPS, Maersk, HDFC Ergo, and one of the most popular ones, FedEx.
What are the Benefits of Shipping Insurance?
The benefits of shipping insurance include saving money, protecting goods, having peace of mind, obtaining insurance easier, no additional fees, and most significantly, covering losses!
If you are Alice and worried about a situation where your orders are lost, broken, or missing during transit to customers, then perhaps it is high time you consider getting this insurance. But always be careful as insurers will have restrictions in places that may render the package uninsurable or force limitations on the limit to which protection will be granted. Few carriers also have conditions on what can and cannot be shipped.
With the pandemic, there has arisen a huge level of uncertainty. It shows that multiple factors can go awry during shipping, so having insurance will be good for the pocket. The article aimed to simplify the complicated information on shipping insurance and shows that it brings a difference between breaking a business or building one up.