Only 20% of consumers were forgiving of online retailers for delivery delays and disruptions due to supply chain issues in 2021.
No matter how robust your logistics processes are, there's always a risk of packages being lost, damaged, or misplaced during transit. So you want to make sure that your eCommerce business is ready to handle these issues when they come up (and ensure your customers are part of that happy or at least forgiving 20%).
This is where shipping insurance comes into play, providing financial protection for both eCommerce store owners and your customers so you can move forward fast after hiccups.
In this comprehensive guide, we will dive into the importance of shipping coverage and explore the various shipping insurance benefits that you can implement into your eCommerce business strategy.
The Importance of Shipping Coverage
Shipping insurance acts as a protective safety net for your packages, providing a layer of defence against the uncertainties of the shipping process (no system is perfect).
Functioning as a financial safeguard, it covers unexpected events during transit, such as loss, theft, or damage to goods – relieving you, and your customers, of the burden.
Shipping Insurance Benefits
1. Financial Protection
Whether it's a lost package, stolen goods, or damage during transit due to weather or vandalism, shipping insurance ensures that the declared value of the goods is compensated, without the financial setback on your business.
2. Streamlined Claims and Resolutions
One of the key shipping insurance benefits is its role in streamlining the claims and resolution process. In the event of mishaps, having insurance in place facilitates a smoother resolution, protecting businesses from potential customer loss and maintaining a positive customer experience.
Research has shown that 95% of online shoppers expect all shipping issues to be resolved while in transit. So you want to have a process in place to make sure it is.
3. Trust Building
Beyond its financial implications, shipping insurance contributes to trust-building between eCommerce sellers and buyers.
Knowing that their purchases are covered in case of unforeseen events instills confidence in customers, making them more likely to choose (over and over) and recommend your business.
How Shipping Insurance Works
What Does It Cover?
During the transit of your packages, it typically covers the following scenarios:
- Loss of Goods: In case a package is lost in transit, shipping insurance compensates for the declared value of the lost items.
- Theft: If your package falls victim to theft during shipping, the insurance steps in to cover the financial loss.
- Damage During Transit: Whether it's due to weather conditions or mishandling, shipping insurance provides compensation for goods damaged in transit.
What Doesn’t It Cover?
While shipping insurance offers a broad range of protections, it's important to understand its limitations to manage expectations and prepare accordingly. Here are some common exclusions:
- Inherent Vice or Nature of Goods: Shipping insurance typically does not cover damage that occurs due to the inherent nature of certain goods. For example, perishable items that spoil during transit or fragile items that are prone to breakage may not be covered if the damage is due to their inherent qualities.
- Improper Packaging: If the goods are damaged due to inadequate or inappropriate packaging, this is often not covered by shipping insurance. It's crucial for eCommerce businesses to ensure that their products are properly packaged according to the carrier's guidelines to avoid such issues.
- Customs Rejection or Confiscation: If a shipment is rejected or confiscated by customs due to the nature of the goods or failure to comply with import/export regulations, this is typically not covered by shipping insurance.
- Electrical or Mechanical Problems: Damage that occurs without any external sign of harm, such as mechanical failure or electrical malfunction, is often excluded unless there is evidence of external damage that caused the internal issue.
- Wilful Misconduct: Any loss or damage arising from the intentional misconduct of the insured party is not covered. This includes shipping prohibited items or deliberate violation of shipping regulations.
How Much Does Shipping Insurance Cost?
The cost of shipping insurance varies based on several factors, including:
- Shipment Value: Higher-value shipments often incur higher insurance premiums.
- Nature of Items: Fragile, high-value, or hazardous items may require more expensive coverage due to the increased risk of damage or loss.
- Shipping Distance: Longer journeys or routes prone to natural disasters, political upheavals, or piracy can impact the cost of premiums.
- Claims History: If a business has a history of filing insurance claims, this could result in higher premiums.
Most carriers will offer the first $100 of coverage for free, so if the shipment value is below that threshold there’s no need to worry. For anything over the $100 mark, each carrier has a different rate for calculating the cost of insuring your package based on the factors mentioned above.
Standard rates typically vary from $1 to $1.25 per extra $100 beyond the initial free $100 coverage. Moreover, carriers impose a $3 premium for any insurance acquired after the complimentary one..
How Do You File Claims?
Filing a claim under your shipping insurance involves a structured process:
Contact the Insurer:
- Notify your insurance provider promptly, providing details of the loss, theft, or damage.
Document the Incident:
- Collect and submit evidence, such as photographs or documentation, supporting your claim
Proof of Policy:
- Furnish the necessary documentation proving that your package was covered by the insurance policy.
Claim Submission:
- Submit your claim through the preferred method outlined by your insurance provider, which could involve phone, email, or mail.
Assessment and Compensation:
- The insurance company will assess your claim, and if it aligns with the terms of the policy, you will receive compensation for the agreed-upon amount.
Your Shipping Insurance Options
Choosing the right shipping insurance is crucial, and there are various options available for eCommerce business owners in Canada such as:
Full-Value Coverage
- This type of insurance covers the entire declared value of shipped goods, including the cost of shipping. It provides comprehensive protection for both the goods and the shipping expenses.
Declared Value Coverage
- Shippers declare a specific value for their goods, and the insurance covers up to that amount. Commonly used by carriers like UPS or FedEx, this option allows for flexibility in determining the insured value.
Freight Insurance
- Ideal for situations where the buyer is responsible for transportation, freight insurance offers coverage for the goods during transit when the buyer controls the shipping.
Warehouse-to-Warehouse Coverage
- Extending coverage from the point of origin to the final destination, including any temporary storage locations en route, warehouse-to-warehouse coverage provides continuous protection throughout the shipping process.
eShipper Shipping Insurance
- eShipper provides comprehensive coverage at half the cost compared to other insurance providers in the market. This not only ensures financial protection for your goods but also makes it a savvy investment for your eCommerce business.
Conclusion
The importance of shipping coverage cannot be overstated, considering the unpredictable nature of shipping. You have lots of options, all of which will act as a protective safety net against the uncertainties of the shipping process.
From financial protection against unpredictable events to streamlined claims processes and trust-building with customers, shipping Insurance benefits are undeniable.
As an eCommerce store owner in Canada, exploring your shipping insurance options, understanding coverage types, and choosing a reliable provider like eShipper can make a significant difference in ensuring the secure and efficient delivery of goods.
Don't leave the fate of your customers happiness and shipments to chance – invest in these shipping insurance benefits today to safeguard your business.
