For any supplemental insurance, the value you declare is the maximum value you can recover from the insurance provider in case of a loss.
All providers will require you to provide proof of the lost item’s value, and will pay the lesser of the proven value versus the declared value.
As discussed previously, this provides the option of insuring for your replacement cost rather than retail value, assuming your customer will be satisfied with a replacement rather than a refund in case of loss.
Buying Supplemental Coverage from Third Parties
If you buy supplemental coverage from a carrier, it will automatically comprehend the coverage that’s included for free (e.g., UPS covers up to $100 of declared value for free). In these cases, if you need to file a claim, you’ll file a single claim with the carrier and they will pay it all at once (see the “Filing a Claim” section).
One thing to note about Shipsurance (and most third-party providers’) rates is that they are based on whatever value you declare, with no built-in accommodation for any carrier-provided free coverage. So when using Shipsurance (and most third-party providers), you can:
- Insure the full package amount, ignoring any carrier-provided free coverage. This allows you to deal with a single provider if you have to file a claim, at the (typically small) expense of paying for the carrier-provided portion you’d otherwise get for free. This can significantly reduce both the amount of work you have to do and the time it takes to get paid, since carriers typically take longer to resolve claims.
- Insure the full package amount minus the carrier-provided free coverage amount. This means you will pay less for the insurance but spend more time and eort should you have to file a claim, since you’ll have to deal with both entities and submit all documentation twice.
Also, some insurers (like Shipsurance) will cover the cost of shipping and packaging in a claim if (1) the declared value includes it and (2) it is invoiced to the customer. Many carriers and some third-party insurers will not cover these costs, so be sure to check with your provider.