When choosing the right shipping insurance provider for your shipping needs, you have two options. You can opt for the insurance that comes with your shipping carrier, or you can opt for a third-party provider.
This guide is meant to outline the benefits of different providers and help point you in the right direction for choosing the best insurance provider.
Generally, most businesses go with the carrier’s insurance plans out of convenience. However, carriers may not always offer the best options to their customers. When you consider the key aspects of a parcel insurance plan, such as pricing, coverage, claims handling, and claim closure rates, opting for a third-party insurance provider makes more economical and business sense.
Carriers often have long and tedious claim processes [that often do not close], charge high premiums, and are not insurance experts.
To help you choose which insurance provider best fits your needs, here is some information about a few different third-party shipping insurance companies to compare between one another and with a carrier service:
Parcel Insurance Plan (PIP)
Parcel Insurance Plan (PIP), founded in 1966, provides low-cost package and parcel insurance to business shippers. It offers shipping insurance for small parcels and motor freight.
- Pricing: While PIP does offer discounted rates with major shipping carriers like FedEx, UPS, USPS and other carriers, they only service claims from businesses that ship packages over $100 in value on a daily basis or spend at least $1,000 annually on declared value charges with their chosen carrier.
- Claim Process Handling Time: With the exception of USPS, they typically require that businesses file the claims with the carrier and show proof of said claim before they process a claim. PIP claims are usually fulfilled within 7-10 business days, and are not paperless. Owing to the qualification conditions stated above, they also require the necessary documentation as proof for those qualifications.
- Integration: They integrate with all the major shipping carriers including UPS, FedEx, DHL, and USPS.
- Software: PIP doesn’t have an online claim filing and management system, but it does have a proprietary desktop application - ERIN 2000 - that can be integrated with the carrier software for electronic reporting. ERIN 2000 integrates with UPS and FedEx shipping management systems.
ShipSaver provides labeling and shipping services for U.S based shipments sent through most major shipping carriers. Shipping Saver actually outsources their shipping insurance with different providers.
- Pricing: ShipSaver’s rates are slightly higher than its competitors. For instance, for every $100 above the standard $100 free liability for UPS and FedEx, ShipSaver usually charges $0.75 with a maximum coverage up to $2,500. Premiums for Domestic Surepost/Smartpost and International shipping start at $1.25 for every $100.
- Claim Process Handling Time: ShipSaver has a paperless, online claims process that makes it easy for businesses to raise new claims, which are usually processed within one week of filing.
- Integration: ShipSaver API integrates with most of the major shipping carriers including UPS, FedEX, and the USPS.
- Software: ShipSaver has a free online dashboard that allows customers to purchase labels and insurance for their shipments.
- E-commerce Website Integrations: For now, the software integrates with eBay and Etsy stores, which allows customers to auto-import their sales from those channels. They plan to eventually add integrations for Amazon, Shopify, Magento and Volusion.
ShipSurance, established 10 years ago, provides full shipping insurance for most of the major shipping carriers.
- Pricing: Shipsurance advertises they can shave off between 44% to 97% of standard shipping insurance rates offered by carriers, including USPS International with coverage for First Class International shipments.
- Claim Process Handling Time: Shipsurance has a paperless, online claims process that makes it easy for businesses to raise new claims, which are usually processed within one week of filing.
- Integration: Shipsurance integrates with most of the major shipping carriers including UPS, FedEX, DHL, the USPS and Canada Postal Service.
- Software: Shipsurance provides its own proprietary software, eReports, that integrates with many existing shipping and tracking systems including eBay, Endicia Dazzle, and FedEx Ship Manager. This allows for electronic reporting shipments to Shipsurance from these platforms.
- Unique Features: The eReports eBay extension is a particularly helpful feature, since it exclusively benefits eBay sellers. It allows sellers to automatically import completed eBay sales into the system directly from their eBay dashboard, select the shipments that need to be insured, and send the generated report to Shipsurance. From there, Shipsurance automatically applies its insurance rates to the shipment, and tracks all information on the shipments in one place, including the premiums due on insured packages.
Cabrella Shipping Insurance is a division of an insurance brokerage with over 25 specializing in coverage for high value and target commodities.
- Pricing: A major difference between Cabrella and other providers, in the context of pricing, is the fact that Cabrella is an insurance brokerage. This means Cabrella is not reselling rates within markup and advertises they can essentially beat whatever price the competition is charging. Cabrella’s insurance rates are up to 90% less than common carrier rates, users can packages as high as $150,000 value per package for small parcels.
- Claims Process Handling Time: Claims filing is mostly automated: minimal documentation is needed and most claim fields auto-populate, cutting a huge chunk of time out of the process. Depending on the declared value in the claims, Cabrella usually settles the claims within a maximum of 30 days, unless the claim results in an investigation. Cabrella has a tiered approach to their claim settlement practices wherein, all claims less than $1,000 are adjusted internally by a junior claims analyst, claims between $1,000 and $20,000 are moved up to a senior claims analyst, and claims over $20,000 are referred out to a local adjuster for more thorough and stress free handling.
- API Integration: Cabrella’s API integration allows businesses to easily connect their shipping application to the company’s proprietary insurance application. Supported carrier applications include FedEx Ship Manager™, UPS WorldShip™, Endicia™, Pitney Bowes™, as well as Amazon™ and EBay™ fulfillment programs such as Magenta™ and Shipwire™. The integration is simple and seamless. If your system is not listed, Cabrella has a senior programming team standing by to integrate to whatever you are using.
- Experience & Flexibility: Cabrella has 25 years of knowledge in high-end goods, risk management, and works hand-in-hand with underwriters to make insurance plans that complement logistics processes and customize solutions.
- Software: Cabrella has a proprietary online insurance application that allows businesses to track all their shipping insurance activity in one place. Cabrella’s insurance application has a few special features that set it apart from its competitors such as:
- Notifications generated when any exceptions occur during parcel delivery
- Automatic filling insurance claim forms with the click of a single button using data and information gathered vis-à-vis API integration
- Unique business intelligence and KPIs that businesses use to monitor, analyze and improve their shipping strategies.
First Party Carriers
- Pricing: All the major carriers offer shipping insurance usually up to $100 as a value-added service - and then require customers to purchase additional insurance based on the total declared value of the shipment. As the value of the shipments increases, the total cost of the premiums can burn a hole in customers’ pockets.
- There is typically a $2.70 minimum with $0.90 charge for every $100 in package value when using FedEx, which is their standard rate. FedEx can reduce this rate depending on accounts and details, but third party insurance providers will always be cheaper.
- Claims Process Experience and Handling Time: Most carriers allow for 5-10 business days after the claim has been approved by the company. However, the process to get your claims approved and closed can be really tedious and long - sometimes taking months. Reimbursements aren’t easily guaranteed, and require a lot of effort on the customers’ part to get their claims approved, including furnishing the required documentation to prove the value of the shipments and allowing packages to be physically inspected before the claims are approved.
- Coverage Restrictions: Most carriers have exclusions on the kind of products they will cover along with destinations and fine print that are often not brought to the attention of the buyer. So, opting for a carrier insurance may not be feasible if your business depends on the sale of those restricted items. Their coverage is typically very low on packages, though in some cases, their systems have been known to charge a customer for insurance they are not actually covered for due to lack of intelligence in their insurance systems.
- Software: Businesses using multiple shipping carriers will need to log in each individual carrier’s software or website to track their orders, assuming they are not using a third-party software. As businesses grow and demand increases, using multiple shipping carriers can become inefficient and difficult to track, since carriers do not provide cross-platform integration with competing carriers.
Third-party parcel insurance plan providers score an obvious benefit over common carriers. This is mostly down to the fact that shipping insurance is usually a secondary or value-added service when it comes to carrier insurance providers. Whereas, third-party insurers build their very business around parcel insurance, and are better positioned to help clients receive the best value in terms of quick reimbursement and flexible insurance plans. Choosing the right third-party provider, on the other hand, is a matter of understanding which service can:
- Provide you the best pricing regardless of your shipping method
- Provide you a seamless integration with shipping systems your business is already using
- Provide support for claims filed through any number of channels including eBay, Amazon, Shopify and others in an orderly and quick fashion.
- In the long run, provide you with intelligent insights and cues on how you can streamline and tweak your shipping strategies to minimize losses.
- Provide key risk management tools
Ship with the shipping experts and leave protection to the insurance professionals.
Disclaimer: All the information gathered in this article is from online sources. We are not responsible for any misrepresentation from external sites.