Six Myths About Shipping and Insurance

When it comes to insuring ecommerce shipments, even the savviest of online sellers may not know it all. Don’t be misled by these common myths about shipping and insurance.

Myth #1: Insurance is for the buyer’s protection.

A lot of sellers are confused about this. Don’t be one of them! Insurance is for the seller’s protection, not for the buyer’s benefit. 

On eBay, you can’t even charge the buyer for insurance as a separate line item. That’s because the buyer is covered by eBay’s Money-Back Guarantee: “Get the item you ordered or your money back.” 

Should an item arrive damaged and the seller be unwilling to issue a refund, online buyers can file a PayPal or credit card chargeback. eBay buyers can open a SNAD case, too, since the item is not as described.

It’s true that you may need the buyer’s help in order to file a claim — especially in the case of insurance purchases directly from the carrier, who may require the broken item and its packaging to be presented for inspection. You also may want to hold off refunding your buyer until they’ve helped you file the claim, so they’re motivated to assist you. 

But it’s not OK to withhold a buyer’s refund while you wait to be reimbursed by insurance.

Myth #2: Insurance must be purchased from the carrier.

This may be the most perfidious myth of all! Not only is there no mandate to buy insurance through your shipping carrier, numerous third-party insurers (including ShipSaver) offer better coverage for less than what the carriers charge. 

Furthermore, third-party companies such as ShipSaver are usually much easier to work with when it comes to filing a claim. So it literally pays to shop around before you buy!

Myth #3: Laptops, LCDs, TVs, mobile phones, and tablets can’t be insured.

Oh yes, they can! These items are extremely fragile and loss prone, and they often are not properly packed. For these reasons, USPS and some other carriers exclude them. However, ShipSaver will provide full coverage as long as an adult signature is required at the time of delivery.

Myth #4: There’s no way to insure USPS First Class International packages.

USPS won’t insure its own First Class International packages, but third-party insurers like ShipSaver are happy to cover most items shipping via USPS FCI. There are some exclusions, of course, but no more so than for other mail classes.

Myth #5: Insuring packages is a time-consuming and cumbersome process.

This is only true if you actually go to the post office to purchase shipping labels and insurance, which hasn’t been necessary in this century. Nowadays, insurance on any or all of your items is just a click or two away at shipping time. 

In fact, with ShipSaver, you can bulk-insure all your items at once; filter to insure only selected items; or even set up auto-insure, which automatically insures all shipped items meeting criteria you set — e.g., items valued at $X or more. All of these options are available whether or not you also purchase shipping labels through ShipSaver.

Myth #6: Packages must be insured at the time of shipment.

Not necessarily! With ShipSaver, you can add coverage up to one full calendar day after you’ve shipped your item. By the same token, you can also cancel insurance up to one full calendar day following shipment. 

Now you’ve got the straight dope and can insure your shipped items with confidence, knowing you’ve done it right!

Why It’s Important to Insure Your Ecommerce Packages

When it comes to entrusting your sold items to a postal carrier, insurance can give you more than peace of mind. Although only a relatively small percentage of the billions of packages shipped each year arrive damaged or are lost altogether, that’s no consolation if your package happens to be among that minority.

The bottom line is: If it’s expensive and/or fragile and/or irreplaceable, it pays to insure it.

Buying insurance does increase the overall cost of shipping, so it is not a service to be added willy-nilly. But as an online seller, you’re responsible for getting a sold item to the buyer in its original condition.

 If it arrives broken — or worse yet, doesn’t arrive at all — then you’re on the hook for a refund of that buyer’s payment, whether you insured their package or not. Better to pay for insurance and not need it than the other way around!

As for the covering the cost of insurance, you have several options. Bear in mind that eBay no longer allows sellers to charge buyers for insurance as a specific line item. However, you can fold it into your handling charge. If you’re offering free shipping, factor insurance into the item’s price as part of the cost of shipping. Otherwise, any refund is going to come straight out of your pocket.

Proper packaging is essential to preventing breakage enroute, but it’s not foolproof. The most carefully packed item may still turn up in pieces upon delivery. Worse yet, the carrier’s insurance may not cover it.

For example, USPS specifically excludes “Articles so fragile that they cannot be carried safely in the mail regardless of packaging” as well as “Articles not adequately prepared to withstand normal handling in the mail.” Those terms leave a lot of wiggle room when it comes time to file a claim!

A certain amount of insurance may be included in the cost of postage. UPS and FedEx routinely provide up to $100 in insurance on every package they ship, while USPS’ Priority Mail rates automatically include $50 insurance ($100 for USPS Priority Mail packages shipped through eBay). 

In some cases, this is perfectly adequate — except when it isn’t. For pricey and fragile items such as electronics, jewelry, and many kinds of collectibles, that’s not going to be sufficient coverage to compensate for loss of or damage to that item. 

In addition, it’s important to be sure to insure items for full market value, not just the amount for which you sold them. Under-insure an item, and you may still end up out of pocket; over-insure it, and the carrier may dispute the value.

Remember too that shipping insurance is to protect you as the seller, not the buyer. For items sold on eBay, the buyer is covered by eBay’s Money-Back Guarantee, which states, “Get the item you ordered or your money back.” Other marketplaces likewise expect you to refund the buyer for lost or damaged items, whether or not you in turn are reimbursed for doing so.

In sum, as with any other form of insurance, postal insurance essentially boils down to a gamble: You’re betting that your item may be damaged or even lost in transit, while the insurance provider is betting that it won’t. It’s a bet you’d rather lose, of course, but insuring your packages ensures a win-win situation every time.