Picture the following scenario: you receive a phone call or an email declaring that a ship that contained several crates of merchandise for your ecommerce business has been tragically lost at sea. You break out into a cold sweat remembering that you elected not to select for insured shipping, as you thought there was no way such an unlikely event could happen to you, and you wanted to avoid any further stressors to your bottom line. Now, instead of spending a few percentage points of your revenue on package insurance, you’re out potentially thousands of dollars and left scrambling to make up the deficit, wondering how big an impact this one setback could potentially have on the rest of your business.
Perhaps a bit of a dramatic example, but stories like this happen every single day in the wide and tumultuous world of shipping and fulfillment. Now, let’s rewind. Imagine if instead, while you were filling out the online form during checkout, you had accepted a bit of an extra charge just for the peace of mind. You’d checked the shipping insurance calculator and decided that the extra money you’d spend to insure packages would be well worth being able to sleep well at night. In this scenario, when you receive the phone call or email about your lost cargo, you feel momentarily concerned or perhaps a bit annoyed, but it’s nowhere near the level of panic you felt before. You know that perhaps there will be some delays in getting your merchandise to your customers, but you won’t be out the insane amount of money you would have been otherwise. You made the safe decision.
That’s all very well and good, but what is shipping insurance, anyway? Does priority mail have insurance already tacked onto the price? And is route shipping insurance worth it? Read on for further information all about postage insurance, the prices you can expect to pay, and the ways it cushions your business from unexpected adversity.
The simple answer to the question of how much it costs to insure post is “it depends”. I know, not a very satisfactory answer, but hold on a moment. Are you talking about a letter you’re sending to your friend in another town, or pallets and pallets of international cargo freight? There’s a whole world of options between these two extremes, so it’s helpful to break down this question into smaller boxes. When it comes to air or marine freight, most brokers charge on the basis of a couple of percentage points. If a carrier offers insurance for up to 60% of the value, for instance, which is quite standard, you might pay up to two dollars for every hundred dollars of value. That’s really not very much when it comes right down to it.
Postal insurance rates, however, are a bit more variable. When it comes to priority mail insurance included is the default that pretty much all major carriers conform to. For USPS, standard shipments can be insured up to 5,000 dollars, and pricing depends on value but starts at only $1.45. Insurance can be purchased and added to shipping labels from the comfort of your own home, so it’s an excellent choice for small businesses and can easily be wrapped up in the delivery fee handed over to the customer at checkout. Fedex offers coverage for values up to $100, and then it’s three dollars more to increase coverage to $300. Prices scale from there. UPS similarly offers free coverage up to $100, and charges extra from that point on.
As a rule, all parcels sent through first class mail are insured against loss or damage. That’s part of the benefits you get by paying a premium for first class. If you want to be extra sure of where your merchandise is at all times, USPS also provides monitoring for small goods weighing less than 13 ounces. Unfortunately, letters and flat mailers have no tracking capabilities. Of course, if you’re extra worried about your items, additional post office insurance can always be purchased for an additional price. But if you’re already paying for first class service, you may be gilding the lily just a tad.
Selling products in your store that your average customer may not want to be displayed to the entire neighborhood should your courier partner drop it on their front porch? No judgment here! We all have to order things we don’t want listed in this week’s neighborhood gossip column. When you select this option, your merchandise is delivered in a plain, opaque cardboard box. Often there’s not even a company name or any branding printed on the packaging. The only markings are typically just the shipping label to tell the delivery service where to send the parcel. No one can look at the package and deduce what could be inside.
Alright, you might say. I understand that there’s a chance that any given package might get lost. But how likely is it to happen to me? Is coverage for damage or disappearance really something I should factor in? The short answer is absolutely yes. Even just looking at domestic shipments of parcels, 1.7 million boxes go missing in the United States every single day. In some cities, the percentage is as many as one in ten. In New York City alone, up to 90,000 packages disappear without explanation each and every day. This isn’t just due to postal carrier negligence or a distribution error, of course. Part of this is the result of the ever-growing epidemic of package theft by people colloquially known as porch pirates, which annoy merchants and customers alike on the daily and make it an irritating and costly process to ship and insure. Good business practice demands that merchants replace items that go missing during transit, meaning that package piracy results in countless dollars in losses. Current estimates put yearly losses due to parcel theft at 25 million.
In this day and age where the global supply chain seems more tenuous than ever, it’s simply ill-advised to forgo any sort of protective action on your merchandise. Cargo accidents, mistaken reroutes, and outright theft can take a serious bite out of your bottom line if you refuse to be proactive and purchase coverage ahead of time. Insurance is easy to get and costs only a scant percentage of the value of the goods in question. When you take a step back and examine your options, it’s a no-brainer. P2Pseller can help you acquire coverage for your shipments through our contracts with major courier services, meaning that you pay less to keep your items safe than you would if you went to these companies as an individual. Register a free account with us today to see all of our offerings and prices up front before committing to anything. We’re ecstatic to help you grow your business bigger than ever before.