Safely shipping your products from point A to point B can be one of the most challenging aspects of owning a business. On average, 10% of ecommerce shipments arrive at their destination damaged. These statistics rise to a staggering 21% for oversized purchases.
Naturally, customers look to you to rectify the situation. Shipping insurance offers financial protection that enables you to replace any merchandise that is lost or damaged during transit.
What is Third-Party Shipping Insurance?
Typically, when you ship a package, you'll have the option to purchase parcel insurance from the carrier. If something happens to your delivery, shipping insurance will reimburse you. However, most carriers have restrictions, and coverage may not be available for all shipments.
For example, USPS doesn't offer protection for lost packages with a declared value of more than $50,000. With most carriers, you'll only receive automatic coverage on parcels with a declared value of up to $100, unless you pay an extra fee.
Third-party shipping insurance provides coverage for parcels sent through nearly any carrier and offers more comprehensive protection for lower rates. A simpler claims process, customizable solutions, and higher coverage limits help protect your business from losses while streamlining delivery processes.
Below is a detailed overview of the five main benefits of using a third-party insurer.
1. It's Cheaper than Carrier Insurance
You could save up to 90% on coverage from a third-party carrier compared to that of shipping carriers such as UPS, USPS, FedEx, or DHL. Most providers will charge a fee if your shipment has a declared value over $100.
For example, FedEx charges $3 on US Express services with a declared value between $100 and $300. UPS insurance costs $.90 for each additional $100 of declared value protection with a minimum charge of $2.70.
Note that the declared value coverage isn't the same as insurance, despite the striking resemblance. The declared value increases the carrier's maximum liability in the event of a loss or damage. As a result, you can't always expect to recover your full losses.
2. International Flexibility
Some countries don't permit shipping insurance, which leaves you at risk when sending parcels internationally. Additional service limitations often also apply. For example, USPS doesn't offer coverage for packages sent to the UK through International Priority Airmail. You'd have to upgrade to International Express Air.
However, third-party insurance can protect your shipments in countries where you previously couldn't get coverage. You'll also receive an evidence of insurance certificate for your records. Additionally, you'll have access to integrated software that can track your shipment with different carriers across the globe.
Shipping insurance companies will connect with the national carriers to ensure your packages are delivered after the final clearance from customs. Without this service, you'll have to rely on the local postal service in the destination country to complete the delivery.
3. Higher Declared Values
When you purchase standard insurance from the delivery carrier, you'll have $100 of declared value coverage. If you want additional protection, you'll have to pay more and can only insure items up to specific amounts.
With third-party coverage, you can insure individual shipments for up to $150,000. In comparison, UPS, USPS, and FedEx only insure packages with a maximum declared value of $50,000. For FedEx Same Day delivery, the limit is $2,000.
4. Faster, Easier Claims
If you need to file a claim through the delivery carrier, you'll have to fill out online claim forms, contact various representatives, and collect an abundance of paperwork. Additionally, you'll need to make sure you file your claim promptly and keep track of the different cut-off times. Depending on the type of shipment, destination, and mail service, you'll have to file the claim within 7 to 60 days for domestic packages. Afterward, you'll have to wait up to 120 days for a resolution.
However, you can easily avoid most of these hassles with insurance from a third-party. After filling out an online claim form, your insurer will complete the supporting documents. You can expect payment of claims under $20,000 in less than 30 days.
Some shipping services, such as UPS, impose claims restrictions on certain items. For example, if you're shipping antiques or specialty items, UPS will require an appraisal or proof of value. In contrast, a third-party provider will insure all of your high-value items.
By working with a third-party provider, you can insure your packages with all major carriers. You can even submit a carrier for approval if they aren't on the list.
At the same time, you can track all of your shipments among different carriers from a convenient dashboard. You'll have access to data, statistics, and notifications that help you manage your insured packages.
When you work with a third-party insurer, you'll have a single point of contact for all of your insurance-related needs. You won't have to waste time contacting individual carriers or filling out redundant forms. Instead, you can call customer support.
Shipping Insurance from Cabrella
Cabrella is a leading third-party shipping insurance company that transforms shipping into a user-friendly experience. Cutting-edge shipping insurance software enables users to track their packages in real-time, file paperless claims, and identify delivery risks.
Whether you're shipping parcels domestically or internationally, you'll have access to the same insurance coverage levels in nearly every country. Cabrella's software also helps you make informed decisions by tracking your order history and helping you determine the best ways to ship goods to high-risk areas.
Contact us today or request a quote below for customized insurance plans that complement your business goals.