Shipping 101, part 4: Shipping Insurance
We set the ground-work about the different shipping carriers and how to pick the best one for your business in part 1, part 2, and part 3 of this ecommerce shipping 101 series. Now that you know the carriers, let’s talk about shipping insurance.
There are two basic types of shipping insurance: Cargo Insurance and Declared Value Insurance.
Declared Value Insurance is what all three carriers offer, and it’s included at up to a $50 or $100 value. Declared value is the maximum liability for that package in the event of loss or damage. If filing a claim and you have declared value insurance, the shipper must prove the carrier’s negligence directly resulted in the loss or damage to the shipment.
Cargo Insurance is the type of insurance you get if you go with 3rd party insurance. ShipWorks insurance (managed by InsureShip) is cargo insurance, not declared value insurance. If filing a claim with cargo insurance, the insurance provider will pay regardless of if the loss or damage was due to the carrier’s negligence.
This chart will help explain several of the other differences between Cargo Insurance and Declared Value Insurance:
Shipping carriers’ declared value insurance is about $0.90 cents for every $100 of insurance. In addition, they have a minimum charge of $2.70.
Alternatively, third-party companies’ cargo insurance charge about $0.55 for every $100 and they don’t have a minimum charge.
The Bottom Line: Insurance Cost & Coverage
Third party cargo insurance lets you save more and you receive broader coverage on your shipments.