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Shipping Insurance: Ways Your Shipment Can Be Lost

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Assuming the value of your item is in a range where adding supplemental insurance makes sense, the following criteria can help you determine the risk associated with shipping the item—and potentially help you lower that risk.


Ways Shipments Can Be Lost During Delivery

  • Item type: Thieves look for high-value, compact, easy-to-resell or -pawn items; laptops, personal electronics, and jewelry are favorites. And, unsurprisingly, they look for brand names—so be sure you don’t ship items in their branded boxes. Some sellers actually pack small, high-value items like jewelry in oversize boxes to obfuscate the contents. However, adding supplemental insurance is the safest bet for items like these.
  • Packaging: Packaging can influence both damage and theft rates. In addition to considering package size in your risk calculus, consider package markings: Do they provide clues to the contents? And of course appropriate internal packing material can all but eliminate the risk of item damage
  • Destination: Theft rates can vary significantly by destination in the United States, and both theft and damage rates are generally higher outside of the States, making insurance even more important for international shipments.

Looking at ShippingEasy data on international shipping, we find that shippers insure about 5% of international shipments across the board, regardless of destination or volume—versus insuring about 1% of domestic shipments. Fortunately, all major carriers and insurance providers offer international shipping insurance, and in some cases the rates are no higher than for domestic shipments.

Unfortunately, they also all have restrictions on covered countries; some countries (e.g., North Korea) are not covered at all, and some have certain conditions placed upon their coverage. In some cases, replacement value is capped by the weight of the package.

When shipping internationally, insurance is generally a good bet—but be sure to check with your insurer to make sure you fully understand how the insurance works based on the destination country and package value.

  • Shipping method: Trackable orders are lower-risk than non-trackable orders, and deliveries requiring signatures are the lowest risk of all. However, even under these scenarios, every carrier will impose limits on liability, and often supplemental insurance still makes sense. In fact, many third-party insurers will require some basic level of trackability to insure your package.

This should all be considered when deciding which type of orders you want to insure for your eCommerce store. While losing items during delivery is rare, your chances go up significantly if they hit a lot of the points mentioned above.


Next: Determining ROI of Shipping Insurance


This article is an excerpt from The eCommerce Seller’s Guide to Shipping Insurance


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