When you are shipping something, you might hear the term declared value. Declared value should not be mistaken for shipping insurance. It's incredibly important to understand the difference in these two terms so you can decide how much insurance coverage you need and how to proceed with your shipping needs.
Declared value is the cost of a shipped item as stated by its shipper. Declared value is an option when calculating freight charges. It is used for limiting the carrier’s liability for delay, loss, or damages. Usually, declared value reflects the shipment’s cost to the business and is generally less than the customs declared value. When you are shipping a package, you will get declared value coverage.
Declared value coverage is not insurance, but it does raise the financial liability of the carrier. Depending on the shipping company that you use, the declared value might represent different things. As an example, UPS uses the declared value to establish its maximum liability in the event of loss or damage to the package.
FedEx refers to the declared value as the insured value, and if there is no declared value, the maximum liability is $100. Declared value is beneficial if you are making a one-time shipment or if you are shipping a parcel with a lower value. If you are sending a package valued at $100 or less, then declared value should be adequate in the event of a package being lost or damaged.
If you ship frequently, ship parcels with a higher value, or ship internationally, you should protect yourself with shipping insurance. FedEx and UPS each provide $100 of insurance per package automatically. If you are shipping items such as artwork, collectible coins, valuable musical instruments, jewelry, medical supplies, pharmaceuticals, or something similar, you should make sure you get the right amount of shipping insurance. You will declare a higher value than what the carrier will cover.
You should partner with a company that provides eCommerce shipping solutions that are customized to meet your needs individually. A cookie-cutter approach cannot work for all shipping needs and all kinds of industries. Customized eCommerce shipping solutions consider if signature confirmation is required for all packages, if you have difficulty getting insurance when shipping to specific ZIP codes, and if you need higher limits.
Cabrella provides personalized shipping insurance services, insuring almost every carrier to more than 180 countries. Shipping insurance can help a business that depends on shipping its high-end, valuable goods to clients around the world. Losing packages without the proper shipping insurance coverage can have a severe financial impact on your business operations.
Purchasing Shipping Insurance
When insuring a package through the delivery service, there are restrictions. You should read the fine print before shipping a package or before buying insurance through the carrier. Some things are not covered through the carrier’s shipping insurance even when you purchase the extra coverage. As an example, UPS will not cover precious stones, cash, or coins. USPS and FedEx both have their limitations and restrictions as well.
The carriers can also have limitations on declared value. As an example, FedEx has a declared value limit of $1,000 for artwork and antiques, regardless of the actual cost of the item. If you need to send a customer a $4,000 painting or a $6,000 antique vase and it gets damaged during transit, they will only pay $1,000 despite your declared value and request for shipping insurance coverage. Third party insurance providers like Cabrella are able to provide higher coverage limits up to $20,000 per shipment and are able to provide this for a fraction of the cost of common carriers.
Using Your Shipping Insurance
If you learn that your package has been lost, stolen, or damaged during transit, you aren’t just going to be compensated by the insurer. You will need to file a claim. You should start the claims process as soon as possible after you realize that there is a problem with your package. Any claim will require supporting documentation to show your losses.
The claims process usually includes completing a claim form, providing evidence of your insurance coverage, proof of the value of what was being shipped, and evidence of the contents being damaged or evidence of its loss – which would be showing the tracking number and proving that the item never reached its destination after having departed from the point of origin.
If the shipment is damaged, some shipping insurance companies require a written estimate for fixing the damage. When there is a reason to believe that the item is repairable, you might not get the full item value. Instead, the cost of repairs or replacement parts might be what you receive. As an example, if you are shipping electronics, such as a computer and the computer’s video card is destroyed, but the rest of the computer is fine, you might receive the value of the video card, so it can get replaced.
When you file a claim with shipping insurance, you might have to wait for processing. However, when you are working with a company that specifically handles shipping insurance needs, the process is much more likely to be handled more smoothly and proceed more quickly. Cabrella, for example, makes claims processing paperless and can be resolved in 30 days of filing, as opposed to common carriers that require extensive paperwork and takes several months to resolve.
Take the time to assess your shipping insurance needs and talk with a well-established provider so you can make sure your business has the protection that it needs when shipping goods.
Purchase Shipping Insurance
It is important to understand that declared value just affects the maximum liability of the carrier and is not the same as shipping insurance. Know your options and make sure you have the right coverage for your financial needs to ensure you are protected in the event your package is damaged or lost. There are options for services that provide dependable shipping insurance, so make sure you work with a reputable organization that is knowledgeable in this area.
Cabrella can save you up to 90% in shipping insurance costs. Get a quote today to find out how you can start saving!