The holiday season will be here soon enough and the volume of shipments will push all carriers to max capacity. Many carriers hire temporary staff to fill the void. The USPS alone delivered over 17 billion pieces of holiday mail. UPS and FedEx shows over a 5% increase in their volume during that time as well; with roughly 750 million packages during the holiday season.

“All three parcel carriers are extremely reliable as well as the freight companies during the holiday season” says Shannon Steede, CEO of ShippingInsurance.Shop.

All three parcel carriers do admit that at times of high volume, things do not run as smoothly.

When a package or freight changes hands many times you may wonder if you should purchase insurance for your shipment. “It always depends on the shipment value and packaging” says David Myles, vice president of ShippingInsurance.Shop. He adds that with the low pricing and competitive market, shipping insurance is worth the purchase for most shipments now and consumers should consider coverage.

Before you purchase shipping insurance, here are 10 things you should know.

1: Is Shipping Insurance Worth It?

Depending on the shipment cost (purchase price) you may already have some coverage from the carrier. Many parcel items will transfer an average of 5 locations prior to getting to the delivery driver. Freight is the same transfer times for many terminals and locations. Could your shipment get damaged? Depending on factors like packaging, route, employees and equipment you need to personally decide if adding shipping insurance is worth it.

2: Some Packages Are Already Covered Automatically

Each domestic UPS parcel is covered up to $100 against loss or damage. FedEx has the same policy as well. USPS offers coverage up to $100 only on Priority Mail Express and $50 worth on Priority Mail.

Each Freight shipment is covered by carrier valuation (Federal law regulated) that shipping companies assume that if your goods are lost or damaged, the shipping company agrees to pay a specified amount that has been proven to be directly caused by the carrier.

All three parcel carriers and freight shipping companies offer declared value coverage, not insurance. “A declared value a shipment (freight or parcel) represents their maximum liability for that shipment in the event of loss or damage” says Shannon Steede, CEO of Shipping Insurance Shop.

This means that you must declare the value of your shipment if the valuation is higher than the carriers maximum liability. Never assume you are protected, notes Steede.

If you want extra coverage to match your shipment value, then you will have to pay for it.

3: Know Your Restrictions: Commodities

There are some important factors to deciding if you want coverage and if you can get coverage as well. “Business owners and consumers need to know if their shipment is covered before shipping,” says Steede.

There are some items that are not covered by parcel carriers such as coins, bullion, precious stones and other items shipping via freight such as carbon black, televisions, computers and phones are not insurable.

“Being aware of proper packaging is another area many overlook until it is too late,” says Steede. Freight and Parcel Carriers will not pay a claim on a package that is not packed properly. “Don’t stick a meat slicer wrapped in a towel in a cardboard box,” cautions Steede. Packaging requirements are posted on parcel carrier websites and you would need to contact your freight carrier or broker to understand what is considered proper packaging prior to shipping. Find a list of restricted commodities here.

4: Know Your Restrictions: Locations

Knowing what you can insure is as important as where you can insure as well. Some countries you can ship to and insure only until discharge at the port/airport and others you cannot insure to at all. Find a list of restricted countries here.

There are also times where insurance may not be able to be purchased due to a country during war-time or strikes.

5: Receiving a Shipment and Inspection

As a business owner or a consumer, you should always know how to properly receive a shipment and inspect prior to the driver leaving. “Freight companies have been trying to force consignees to sign for a shipment prior to unloading. Do not allow that to happen. You have a right to inspect your shipment prior to the driver leaving,” warns Steede.

Parcel shipments have similar characteristics and Steede recommends: “If the driver is trying to get you to sign for a shipment prior to inspection, note on the paperwork – driver would not allow inspection prior to signing.” If the parcel carrier has a handheld signing machine ask they make a note prior to you signing. “Always assume the item is damaged and the shipping company is going to find any way to get out of paying,” adds Steede.


We suggest taking photos of packaging on arrival if you notice any visible damage.

Check outer packaging. Note if there are any dents, dings, holes, staples, leaks, missing tape, repackaged or obvious noises coming from inside the package. “I always suggest a recipient actually flip over the package as well to inspect. Many people forget to do this and many times the damages are visible on the bottom of a package,” warns Steede.

Carefully open the package and note if there is any evidence of damage after opening.

If there is damage immediately inform the driver and you will be able to either refuse the shipment or receive with noted damage.

Take photos of all damage and if you are keeping the shipment retain all packaging.


We suggest taking photos of shipment on arrival if you notice any visible damage.

Once shipment is on the tail of the truck: Check outer packaging. Note if there are any missing straps, wrapping broken, dents, dings, holes, staples, leaks, missing tape, pilferage, shipment was repackaged or obvious noises coming from inside.

Decide if you are refusing the shipment or not.

Driver may ask you to sign prior to unloading If they do, sign the BOL with “driver would not allow inspection prior to signature. Damage inspection was not allowed and damage is expected”.

Carefully open the freight shipment and note if there is any evidence of damage after opening. Note on BOL what you see. Have driver countersign and keep a copy.

If there is damage immediately show the driver and take photos of driver standing next to damage.

Take photos of all damage and if you are accepting delivery and retain all packaging materials in the event the carrier wants to inspect the claim.

Contact the company you purchased from immediately to inform them of the issue and see if they have a SOP claims process they would like you to follow.

If you insured through a 3rd party, the claims process and contact information are typically on the insurance certificate.

Gather all paperwork, images and statements ready for the claims process.

6: How To Process a Claim

Most sellers/companies have a SOP (Standard Operating Procedure) on how to file a claim. Always contact them to see if they have instructions on properly filing a claim.

You may be asked to file online or possibly filling out a form to fax/email.

3rd party insurance providers typically have claims instructions on the insurance certificate.

Never release the insurance certificate to any company except the underwriter on the insurance certificate.

7: Claims Documentation

No freight or parcel shipping company will automatically send you a check for damage or loss. You must file a claim, or you will not recoup your cost.

When filing, you need to have all your shipping documents ready. Improper filing will get your claim denied and you will be forced to start over.

You will be required to have the signed delivery receipt, original waybill/BOL, invoice of purchase as well as other particulars proving loss or damage claimed.

Replacement costs: You will be required to list replacement costs. Do not try to inflate this amount. It is a crime to fraudulently file a claim.

8: Time Frames of Claims Processing

Each carrier has a different procedure on how long to file a claim and how long before the make determination of a claim. Small parcel carriers typically have claims completed in 30 days. Freight companies are allowed up to 180 days to make a determination and usually they will have it completed in 4-5 months.

9: 3rd Party Shipping Insurance

So now you have a vision that every shipment will arrive damaged or not arrive at all. Seeing months of your money tied up and not having a replacement is infuriating.

Stepping in is 3rd party insurance companies. They allow the ability to pay less for insurance and get claims processed faster many times before the shipping company has made a determination. You pay for what is needed and nothing more. Here is a side by side comparison on companies that offer shipping insurance and you can see that there is a variety of companies. Finding the right one for your needs is will take a little bit of homework.

Some companies offer basic insurance. You are better off burning your money since the coverage is less than what a shipping company offers.

Some companies offer total loss and that is exactly that. Total loss and they pay. That does not work well for damage.

The kind of insurance that is the all-around best is “All Risk” It is the broadest coverage for shipping that many call “signature to signature coverage”. That means that there is 100% coverage from loss, pilferage and damage from origin to destination except for the pesky exclusions we covered earlier.

10: Carrier Valuation Versus 3rd Party Shipping Insurance

Carrier valuation is typically a flat cost per pound or freight class. If you are not aware what your carrier (or broker) covers, you should be asking. You may find lapses in coverage and realize too late that you were not covered. Also, freight companies will try everything not to pay a claim. Example: We had a liquor distributor send two pallets of aged whisky and only one arrived. The delivery receipt showed only one signed for and the shipper filed a claim on the missing pallet. The freight company (Land Air) denied the claim for the following reasons:

Per the attached delivery receipt, this shipment was delivered and received in good condition without a delivery exception.  Thus, this is a concealed shortage claim. We have no record of the claimed shortage being found in our system.  Since the shipment was signed for without exception, no proof of the claimed shortage has been established.  Therefore, we will not be able to participate in your claim. 

Now in what world would anyone think that if you ship two pallets and one arrives, the obvious reason is one is missing. You can see the freight companies will throw many obstacles at a claim not to pay. That is why we recommend 3rd party insurance.

3rd Party Shipping Insurance is the most popular way to protect your shipments. The insurers pay in weeks, not months and although they do follow a similar process on managing claims and claim submission.

3rd Party Shipping Insurance allows anyone stress relief on getting a claim paid. By collectively insuring many companies they have the ability to reduce insurance costs and claims are a collective dollar/percentage amount. We suggest you verify an insurers in ALL states you are shipping to or from. There are several online sellers that are not licensed in all states as required by law.

Third-party insurance for a single package is generally cheaper than the carrier’s coverage. For example, will charge as little as 80 cents for a package, whereas UPS and FedEx both have a $2.40 minimum.

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