Smart business owners have learned early on that it’s important to save anywhere possible to stay competitive. One of the best ways to do this is through 3rd party shipping insurance.
Why 3rd party shipping insurance? Because if you don’t insure your products, you could lose more than just a customer. You could destroy your business and reputation.
To get the maximum benefit out of shipping insurance, it is vital to have knowledge so that if something happens to one of your shipments, you can be fully reimbursed for the lost or damaged item, shipping costs and other costs.
Who: Know where you’re getting your insurance from. Is it a carrier or a 3rd party Shipping Insurance company? Getting insurance from a carrier may seem the easiest, but third-party insurance is generally less expensive and provides better coverage. Carriers offer valuation, not insurance. While parcel carriers charge about 85 cents for every $100 of insurance (with a $2.55 minimum), 3rd party shipping insurance companies charge about 55 cents for every $100. For example, Shipping Insurance Shop (managed by Transportation Management Supply) will charge as little as $0.80 for a package to be insured, whereas UPS and FedEx have $2.55 minimums for the same package.
What: Know what type of insurance you’re getting. Is it declared value or cargo insurance? These terms are often interchanged, but they’re not synonyms and their coverage varies greatly.
One of the most significant issues is that with using the carriers “declared value” you must prove that the carrier’s negligence directly resulted in the loss or damage to your products. This can be very difficult to prove and results in claims that are not paid. Comparatively, 3rd party shipping insurance covers the shipment while in transit. 3rd Party Shipping Insurance pays regardless if the loss or damage was due to the carrier’s negligence.
How much: Insuring items you would need to calculate the worth, or what is most likely to be spent to replace it. You are unlikely to get more shipping insurance compensation for the item than its current retail value, so do not select higher insurance values expecting to make money.
Combining insurance: Have you ever thought you could combine 3rd party shipping insurance with the carrier valuation coverage available from carriers? You could do it, but we don’t recommend it. Why? basically, the amount of time and energy spent with the carriers as well as the insurance provider will waste time and your energy.
If you have to file a claim, you will need to file with the 3rd party shipping insurance provider. If you decide to try and split insurance coverage and you have to file a claim, you will need to first file the claim with the primary insurer. If the primary insurer denies your claim, the secondary insurer is required by law to abide by the first carrier’s decision.
Filing a claim: Start your claim as soon as you realize a package is damaged, lost or stolen. Carriers and 3rd party shipping insurance companies have different deadlines for filing a claim. File as soon as possible, so that you don’t miss the allotted window.
The documentation you need is fairly standard for 3rd party shipping insurance providers. With Shipping Insurance Shop, if your claim is for a lost package, start by contacting the carrier to see if they can locate the shipment. If there is damage, then you will need to retain the packaging materials for inspections if required. The entire process can be managed online, once the claim and supporting documents (such as pictures) are submitted, it will take about 7-10 business days for payment. When you use a carrier’s insurance, you need to provide evidence of insurance and mailing the shipment, and it usually takes 120 days for a completion.