There’s nothing worse than dealing with a lost, damaged, or stolen package -- but somehow, it’s even worse when it happens to your customers. This is an annoying issue that online retailers deal with on a regular basis. However, there are things you can do to protect your packages and your business in the process. Shipping insurance is perhaps the best solution out there to this commonplace issue. 

What Is Shipping Insurance?

Shipping insurance allows a shipper to get reimbursed for the value of a package if it is lost, stolen, or damaged in transit. Some carriers offer a certain amount of shipping insurance included with the shipping service up to a particular value (usually $100). For more valuable items, you will have to purchase supplemental shipping insurance to cover the entire cost of the package. 

How Much Does Shipping Insurance Cost?

The exact cost of shipping insurance varies depending on the carrier and the value of the package contents. 

USPS Insurance Costs:

  • $1.65 for contents up to a $50.00 value
  • $2.05 for contents valued between $50.01 and $100.00
  • $2.45 for contents valued between $100.01 and $200.00
  • $4.60 for contents valued between $200.01 and $300.00
  • $4.60 + $0.90 per every $100 in value over $300.00 -- up to $5,000 

FedEx Insurance Costs:

  • $0 for contents up to a $100.00 value
  • $3.00 for contents valued between $100.01 and $300.00
  • $3 + $1 per every $100 in value over $300

UPS Insurance Costs:

  • $0 for contents up to a $100.00 value
  • $1.05 per every $100 in value over $100.00 
  • UPS has a $2.70 insurance minimum, so the contents’ value must be at least $300.00 to qualify. 

Why Do You Need Shipping Insurance?

As stated above, shipping insurance allows you to get reimbursed by the carrier in the event that your package is lost, stolen, or damaged during transit. This offers you an extra layer of protection during the shipping process and ensures that you won’t be out the total cost of the package should something happen. 

Shipping insurance is particularly valuable these days when package theft is at an all-time high. According to recent research from Rensselaer Polytechnic Institute, 1.7 million packages are stolen or lost every single day in the United States. As a result, one in every three Americans reported having at least one package stolen -- leading to $25 million of lost goods and services every day. Obviously, these are huge numbers. Do you really want your products to be part of these statistics? If the answer is no (which it should be), then you need to purchase shipping insurance to ensure that you’re not on the hook for replacing the cost of your package contents. 

In addition to being lost or stolen, damaged packages are also a huge problem in the United States -- with one out of every 10 shipments arriving at its destination damaged. Although the likelihood of damage usually corresponds to how far the package has to travel, it can happen at any time during the journey due to circumstances beyond your control. One thing that you can control, however, is shipping insurance that’s able to protect you and your package. 

Is Shipping Insurance Worth It?

So clearly, shipping insurance is valuable, but is it really worth the extra cost? It really depends. For example, if you’re shipping a small number of products with a low value (well under $100), then it probably doesn’t make sense for you to pay the extra fees to purchase shipping insurance. Instead, it would actually end up costing you more and cutting into your profits more than simply replacing the items would. 

On the other hand, if you are constantly shipping high-value items, then it’s definitely worth it for you to purchase shipping insurance. This is especially true for items over $100. After all, if the statistics for lost, stolen, and damaged items show that you could expect to replace one out of every 10 shipments, that would be a lot of money wasted on your part. So instead of covering $100 for every 10 shipments, it definitely makes more sense to pay about $2.00 for shipping insurance on those 10 shipments for a grand total of $10.00. This small-scale example alone could save you $90, so just imagine how much money you could save if you ship hundreds of packages on a regular basis! 

Before determining if shipping insurance is worth it, you also need to make sure that your contents meet the qualifications for reimbursement. For example, the major carriers of UPS, FedEx, and USPS do not insure packages containing coins, cash, or precious stones. Some international destinations are also not covered under shipping insurance. Carriers also may reserve the right to deny your claim if they determine that your package doesn’t meet packaging requirements. Finally, specific items can have value limits, such as artwork, televisions, and antiques. Overall, make sure that you read the fine print of every shipping insurance policy before you purchase it to ensure that it will actually cover what you want it to cover. 

How to File a Claim for Shipping Insurance?

In the event that your package is lost, damaged, or stolen in transit, you need to file a claim for your shipping insurance in order to get reimbursed for the value of your package and the shipping costs. It’s important to file this claim as soon as possible due to the fact that carriers impose a strict timeline to file claims for reimbursement. For example, the timeline for USPS is 15-60 days. For UPS, it’s five months for shipments within the United States and 60 days for shipments outside the United States. For FedEx, it’s 60 days from the purchase date. 

As a part of your claim, you will need to include the proper documentation. For example, if the shipment was damaged, you need to include photos of the damaged goods. The exact documentation required varies by carrier, but you should expect to provide proof of insurance, proof of value, and proof of loss. Obviously, this is easier said than done, which is why it’s really important to keep all your documents safe and organized in the event that you have to file a claim. 

Once you have provided all necessary documentation and have submitted your claim, be prepared to wait to hear back and get reimbursed. This is because carriers usually have a set amount of time to search for the package if it was lost before they reimburse you. For example, UPS searches for the package for seven to ten business days before moving on in the process. 

As a result, the average timeframe for claim resolution varies depending on the carrier. FedEx states that most of its cases are resolved in five to seven days after receiving documentation for the claim. UPS states that most of its cases are resolved in three to five days after searching for the package and receiving documentation. Finally, USPS states that most of its cases are resolved within 30 days. 

Other Ways to Protect Your Shipments

While shipping insurance is a great solution, there are other things you can do to protect your shipments -- particularly against damage. While you can’t always control the damage, you can improve the packaging of your products to ensure that they have better protection throughout their journey. Perhaps the best thing to use is quality and durable protective packaging

Starting off with the box, there’s really nothing better than corrugated cardboard. Corrugated cardboard provides more insulation and protection against the rough conditions of the shipping process. The box should also be sturdy and well-designed. For example, we here at Box Genie offer amazing mailer boxes that are thick yet lightweight and sturdy yet easy to assemble. 

In addition, you need packaging extras to boost protection -- specifically for fragile items. For example, you could use custom product inserts. You could also use things like packing peanuts, air pillows, or filler paper to better insulate the box and protect its contents. 

Finally, you need to properly seal the shipping box with shipping tape and place the label right-side-up in order to prevent damage along the way. While you can never 100% prevent damage, it’s still important to take these steps to protect your products and make them harder to damage. 


At the end of the day, the decision to purchase shipping insurance is up to you. However, if you’re constantly shipping out high-value items, this would definitely be a solid investment for your business. Just make sure to know the policy and the process to ensure that you really get what you’re paying for. 




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