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.
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.
To find out if insurance would be cost-effective, estimate:
That way you can calculate if paying for insurance makes more sense or if you should absorb the cost of replacement yourself. |
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.
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).
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. |
Reminder!
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!
References:
*Canada Post, FedEx, UPS, Purolator