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Shipping Tips & Trends

Shipping Insurance: A Smart Investment or Unnecessary Cost?

Assurance livraison

One of the differences between e-commerce and other businesses is that e-commerce is fully reliant on a third player: the carrier. And carriers too are businesses that have constraints to deal with – weather, road conditions, accidents, and so on. Yet, the vast majority of their deliveries are more than satisfactory and completed on time.


New call-to-actionUnfortunately, it may happen that your package is lost, stolen or damaged while out for delivery. By experience, we know that in such cases, customers expect to be quickly reimbursed or receive a replacement product, perhaps even receive discounts or compensation offers.


For this reason, carriers offer shipping insurance for the “declared value for carriage”. However, should you automatically subscribe?




A lost or damaged package can be very costly to replace or ship again, especially if it is a high-value item.


Before deciding if you should subscribe or not to shipping insurance, think of the products that you ship.

  • Some types of packages are more likely to be stolen. Prime examples of this are products that could be resold, such as jewellery, smartphones, valuable electronics, brand clothing, and so on.
  • The likeliness of theft increases in some destinations. Your carrier can give you more information on these areas. If you ship out of Canada and the value of your package exceeds $100, you should consider paying for shipping insurance. Know that even some insurance companies (other than carriers) may refuse to cover packages sent in high-risk countries, in Central America or Africa for example.
  • Since high-end products are more likely to be stolen, you should calculate the cost of replacing them (including shipping) should you not pay for extra coverage.


Do the math!


To find out if insurance would be cost-effective, estimate:

  • the value of your products,
  • your volume of shipping,
  • the number of products likely to be damaged or lost.


That way you can calculate if paying for insurance makes more sense or if you should absorb the cost of replacement yourself.


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New call-to-actionRates vary from one carrier to another but they are similar. For example, Canada Post includes liability coverage of up to $100 in its Priority, Xpresspost, and flat rate boxes shipping services. For regular parcels, the coverage is available for a fee.


Canada Post also offers additional liability coverage of up to $5000 for a fee for all its services except for flat rate boxes.


FedEx, UPS, and Purolator offer similar coverage. Each domestic parcel is automatically covered for a value of up to $100 against loss or damage. As for packages with a value above $100, additional coverage is available for $2 to $5 per $100 of coverage.




Over time, a small portion of your parcels will inevitably be damaged, lost, even destroyed.


If your products hold a certain value, it would be wise to make sure you have shipping insurance to cover these types of situations.

  • When preparing your shipment, declare the value of each parcel so that your carrier knows the coverage amount necessary should there be a claim.
  • Be honest when declaring the value of the parcels because your carrier will require proof in case there is a claim.
  • Make sure to respect the standards set out by your carrier when packing your products to avoid any denied claims.
  • Make sure your products can be insured and be familiar with the details of the policy. Each carrier establishes a list of products it will and will not cover, whether it be luggage, liquids, hazardous materials, or silver. Consult your carrier’s shipping terms and conditions for full details*. If one carrier refuses to cover your parcel, you may try to get coverage from another company specialized in parcel insurance.
  • Compare coverage rates between carriers and specialized companies such as Shipsurance. Your carrier may not offer coverage for your products, or you may want to get the best deal – whatever the case may be, it’s worth shopping around for rates.
  • If a package is delivered but damaged or has been lost, it is your responsibility to claim it with your carrier. You will need to prove the damage incurred and a proof of the total value.


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As we explained above, to insure or not all depends on the number of parcels you ship out and the value of your products (knowing that in most cases, parcels are already covered for a value of up to $100).

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Some businesses make the choice of not paying for additional coverage, since it is less costly to replace the product than to pay insurance for every item. However, if you ship a lot of high-value products, shipping insurance becomes profitable.





If you choose to pay for additional coverage, when packing your products, make sure to respect the safety standards set out by your carrier and clearly specified on their website. 


Ultimately, whether to pay for shipping insurance or not is simple math; the main question to ask is whether you are able or not to absorb the financial loss in the event of a delivery problem.


Knowing that customers who encounter delivery issues and poor customer service when asking for compensation are likely to never do business with that company again, you want to make sure you take quick action when issues arise by replacing valuable goods and through outstanding customer care.


If your packages are delivered late, you can entrust Buster Fetcher to track all your shipments and claim late deliveries for more money back in your pockets. As for damaged parcels and goods, you must consider the costs involved.


Shipping insurance helps cover the losses. Get your calculators out!



*Canada Post, FedEx, UPS, Purolator

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