What you need to know about shipping insurance for eCommerce

Damaged, lost, or stolen packages could drain your profits and harm customer loyalty. Shipping insurance is a safety net for what happens after deliveries leave your business.

Table of contents

  1. What is shipping insurance?
  2. How does shipping insurance work?
  3. How to file a claim with UPS
  4. How to file a claim with FedEx
  5. How to file a claim with USPS
  6. What does shipping insurance cover?
  7. Who pays for shipping insurance?
  8. How much does shipping insurance cost?
  9. Do I need shipping insurance?
  10. You can add package delivery insurance within PitneyShip®

What is shipping insurance?

Shipping insurance protects eCommerce businesses in the event a package is damaged, stolen, lost, or mishandled on its way to the customer. Major carriers offer some coverage options and it is also available through third-party vendors. 

Coverage prices vary depending on the provider and declared value of your shipment. Either way, having coverage means your business could be eligible for reimbursement when issues occur during transit. This can be especially important when you are shipping expensive items.

How does shipping insurance work?

The shipping insurance process begins when you’re planning a delivery. Shipping insurance works by reimbursing the shipper for the declared value of items in the package, only if the package is insured and then gets lost, stolen or damaged. Sometimes coverage will be included in the service rate. FedEx and UPS, for example, covers up to $100 in declared value liability on every parcel. If you need additional coverage, you’ll have to purchase it.

When something goes wrong during the journey, your business then files a claim. Each carrier has its own way to handle claims procesing, but here are the basics you’ll need in most scenarios: shipping information, receipts, and documentation proving the declared value of the item. 

Another important detail to keep in mind are filing claim deadlines. When shipping through UPS, you have 60 days after the scheduled delivery date to make a claim. FedEx’s window starts from the shipment date, allowing for 60 days for domestic packages and 21 days for international packages. For USPS, each service has its own filing period. Consider tracking the deadlines as part of your due diligence.

How to file a claim with UPS

UPS claims must be filed online within 60 days of the scheduled delivery date. Sellers can make claims when a package is lost, damaged, or a collect on delivery payment is not received. Claims are created in 5 steps:

  1. Begin the claim with package details. Provide information including tracking number, the recipient’s contact information, package weight.
  2. State your relationship to the package. For shipments from your business, identify yourself as the seller.
  3. Add additional documentation. Upload anything related to an item or its stated value, including receipts, invoices, purchase orders, and more.
  4. Attach photos of any damage (if applicable). When making a damage claim, photos can help strengthen your case.
  5. Track your claim online. UPS has a customizable claims dashboard where you can edit claim information, receive updates, upload additional documents, submit additional claims, review history, and more.

How to file a claim with FedEx

FedEx claims must be filed within 60 days of the shipment date. Claims should be filed when a parcel is damaged, lost, or arrives with missing contents. Insurance claims are filed online in a 5-step process:

  1. Start a claim online. Complete the online claim form with the tracking/PRO number and claim type.
  2. Add the supporting documentation. Upload forms to support your claim like a bill, pickup record, serial numbers for merchandise, proof-of-value documentation, proof of payment, invoices, appraisals, and more. If your claim is regarding damage, include photos as well.
  3. Review and submit the form. Double check all the information provided, submit the claim, and save the case number page for your records.
  4. Schedule or conduct an inspection. Hang on to your shipment’s original packaging, including its contents, because some claims require an inspection. For items between $100 and $1000 in declared value, you can print an inspection form and perform it yourself. Otherwise, you’ll have to schedule one with FedEx.
  5. Track the claim online. You can return to the FedEx site and log in to get updates or request email updates until the issue is resolved.

How to file a claim with USPS

USPS package claims can be done online or by mail. One big difference from filing with FedEx or UPS is that each USPS service has its own filing period. USPS also outlines the appeals process in the event your claim is denied. Filing is a 3-step process:

  1. Check filing periods. Each USPS service has its own filing period. The claim windows vary, but all are based on the mailing date listed on the shipping receipt. Damage claims are the exception; all damage claims must be filed within 60 days of the send date.
  2. Gather your documents. Keep any evidence and documentation regarding your claim until the process is complete. Claims must include the original mailing receipt, proof of insurance, documentation proving item value, and evidence of damage (if applicable).
  3. File your claim. Claims can be done online or by mail. USPS suggests that online claims are faster and easier. Filing online also makes it simple to track claims history.

USPS Accounting Services may decide to pay a claim in full or in part. If your claim is approved, payments are processed in 7-10 business days. If they fully or partially deny your claim, there is an appeals process:

  • You have 30 days to file an appeal. Appeals must be submitted by the same method you submitted the original claim (i.e., online or by mail).
  • When writing your appeal, be sure to challenge the reasons the claim was denied. Add any new supporting documentation that might help.
  • If the first appeal is denied, you may file a second appeal within 30 days of the appeal decision. The process is the same.

What does shipping insurance cover?

Parcel shipping insurance covers what happens in transit: delivery delays, damage to items, failure to collect payments on delivery, or any other mishandling that’s out of your business’ control. Coverage can vary by carrier. This table describes how much is covered automatically by each of the national carriers.

Carrier Service Included coverage on package value
UPS All Up to $100
FedEx All Up to $100
  • Priority Mail® (domestic and international)
  • Priority Mail Express® (domestic and international)
  • Global Express Guaranteed
Up to $100
  • First-Class Mail® (domestic and international)
  • First-Class®
  • Package Services
  • Media Mail
  • USPS® Retail Ground
Not included

What does UPS shipping coverage include?

Standard shipping rates cover up to $100 in declared value on every item you ship. If you need additional protection, UPS provides 3 main options for purchasing small parcel insurance through subsidiary UPS Capital:

  • Basic insurance for small package through InsureShield. InsureShield is an option your business selects at the time of shipping for coverage of up to $70,000 in declared value for package shipments and up to $100,000 for freight shipments.
  • Expanded insurance for consequential losses. This option protects against losses from lost or damaged parcels. This service extends the coverage beyond standards to consider items with face value like gift cards or tickets to an event.
  • Insurance for perishable goods. If you’re shipping something time-sensitive like perishable foods, flowers, seafood, or pharmaceuticals, you can add coverage for losses related to item damage, delays in transit, or lost packages.

UPS jewelry insurance can be purchased through Parcel Pro, UPS Capital's option for high value package coverage. Parcel Pro is UPS’ maximum insurance option, covering items up to $150,000.

What does FedEx shipping coverage include?

FedEx automatically covers up to $100 on standard shipments. It also provides an option for a declared value of up to $2,000 on a shipment, where you pay a fee depending on the value stated. It is not insurance coverage, but it does offer the opportunity for reimbursement through the claims process.

What does USPS shipping coverage include?

USPS Priority Mail, Priority Mail Express, and Global Express Guaranteed include up to $100 in coverage for free. Businesses can purchase USPS package insurance for values up to $5,000 (packages containing jewelry are limited to a declared value of $500). Cost to insure mail is determined by the declared value.

Who pays for shipping insurance?

Shipping insurance comes in two forms: seller insurance and buyer insurance. With seller insurance, the business buys coverage from the carrier or a third-party vendor. Some companies offer buyer insurance that shoppers can add to a purchase during checkout.

How long does insured package delivery take?

There is no indication on the FedEx, UPS, or USPS websites that insured shipping takes longer than standard shipping. Besides the time it takes to purchase shipping insurance and declare the value of your item, deliveries will arrive no later than usual.

How much does shipping insurance cost?

Shipping insurance depends on the carrier, service, and what you’re shipping. The tables below outline what you might pay.

UPS costs for declared value tiers

UPS covers up to $100 in declared value for every service. Declaring a value higher than $100 is available for a fee, but it is not considered insurance.

Declared value Cost
$0-100 Free
$100.01-$300.00 $3.45
$300.01-$50,000 $1.15 per $100 of declared value

Prices as of 10/24/22

For calculating additional coverage costs, UPS Capital provides quotes for shipments based on perceived level of risk. 

FedEx costs for declared value tiers

FedEx covers up to $100 in declared value for every service. Declaring a value higher than $100 is available for a fee, but it is not considered insurance. 

Declared value cost

U.S. Express Package Services

U.S. Ground Services

International Ground Service

$3.75 for shipments valued between $100.01-$300

$1.25 per $100 of declared value for shipments valued in excess of $300

International Express Package Services

International Express Freight Services

$1.25 per $100 of value in excess of $100 or $9.07 per lb. (whichever is greater)
U.S. Express Freight Services
$1.25 per $100 of value in excess of $100 or
$1.00 per lb., whichever is greater

Prices as of 10/24/22

USPS costs on declared value tiers

USPS offers insurance for a fee. Prices are determined by declared value, with a maximum of $5,000.

Declared value USPS insurance cost
$200.01-$300.00 $5.40
$300.01-$400.00 $6.80
$400.01-$500.00 $8.15
$500.01-$600.00 $11.00
$600.01-$5000.00 $11.00 + $1.65 per additional $100

Prices as of 10/24/22

Do I need shipping insurance?

Insured package delivery isn’t a requirement, although it’s standard for retailers dealing in high-volume or high-value shipping. Still, companies of any type or size can benefit. The right carrier plan or third-party postal insurance policy could be a safety net for loss prevention. 

You can add package delivery insurance within PitneyShip®

PitneyShip® software solutions make it easy to manage everything related to eCommerce deliveries, including insurance coverage. The ability to access discounts, compare prices, print labels, buy insurance, and whatever else you need saves valuable time. 

Are you a single shipper, shipping from one location? Check out PitneyShip®.

  • Made for the home or office worker shipping from one location
  • Access discount shipping labels and stamps
  • Find the best rates across USPS, UPS, and FedEx with our best match tool
  • Buy and print postage from your computer
  • Schedule pickups and track packages

Do you have multiple shippers in your organization across locations? PitneyShip® Pro is the answer

  • Made for organizations with multiple shippers and/or across locations
  • Compare shipping carrier rates and access discount delivery options across USPS, UPS, and FedEx with our best match tool
    • Includes Certified Mail with electronic return receipt
    • Manage cost accounts across teams