Is Shipping Insurance Worth It?

As it sounds, shipping insurance is a type of insurance you can take out when fulfilling an ecommerce purchase. It can protect you and your package against potential incidents like:

• Theft
• Damage in transit
• Going missing
• Damage in storage

Essentially, any problems that can occur with your package between when it leaves your hand and when it enters the hands of your customer are generally covered by shipping insurance. These policies do have their limits, however; weight, value, and proof of when the damage occurred are all limiting factors for getting a pay-out.

When the right conditions for a payment are met, the insurance provider will reimburse you for the package up to a pre-specified value. This can then be used to replace the package for the customer. Some policies include both the cost of the item and shipping, while others are less generous, so making sure you get a comprehensive deal can save you hassle and money.

How do I Get Shipping Insurance?

Most shipping insurance comes straight from the courier service you’re shipping with. Some couriers like Amazon offer a limited liability by default, although couriers often provide insurance you can purchase on top of the cost of shipping. External shipping insurance providers such as Secursus can also offer competitive rates for safeguarding your products in transit.

Depending on which courier you deliver your package with, you’ll receive a different level of insurance. The benefit of this insurance is directly tied to what kind of package you’re delivering, so understanding these benefits can inform you on whether the extra cost of shipping insurance is worth it or not.

Find out more about courier services and their benefits >

Shipping insurance is the key to ensuring your bottom line. Without it, you will have to reimburse damage to your shipments out of pocket – even if that damage may not have been your fault. With it, you can enjoy stress-free deliveries and sell as many wares as you like without fear.

Some of the key benefits include:

• Managing statutory rights – customers have a right to getting the goods they purchased as described, so shipping insurance stops you from being liable from the cost of goods damaged during transit.
• Preventing or lowering the cost of replacement
• Increasing trust with the customer
• Providing a convenient service to the customer
• Ensuring your peace of mind
• Protecting valuable packages
• Protecting your reputation

With the only downside being the upfront cost of purchasing shipping insurance, it is often a great choice for nearly any ecommerce package. However, sometimes the cost of the insurance might eat into your profits more than the cost of dealing with replacements, so striking that balance is important to ensure your profit margins.

Get the best deal for your shipping and logistics – contact us today.

When Should I Get Shipping Insurance?

When you should get shipping insurance depends on the cost of that insurance compared to the cost of replacing your goods yourself should they be damaged. In the UK, the cost of shipping insurance depends on four main factors:

1. Value of shipment
2. Weight of shipment
3. Courier service used
4. Shipping destination

Domestic shipping is generally less expensive and more comprehensive than international shipping, although some insurers offer the same costs for both.

Generally, the greater the value of a shipment, the greater the cost-efficiency of the insurance. This means, while cheap products might not be cost effective to insure, you’re almost guaranteed to benefit from insuring your high value shipments.

What is the cost of shipping insurance in the UK? Well, that depends on which courier service you go with, and whether or not you’re interested in purchasing external insurance. While there are many providers out there, we’ve narrowed our list down to a few common choices so you can see which deal is right for you – at least as far as insurance goes.

Amazon

As one of the world’s largest ecommerce marketplaces, Amazon gets a consequently large amount of return and replacement requests. While they do have some insurance by default for freight liability, in general it is the vendor’s responsibility to provide external insurance for their packages.

Secursus

This is just one example of many external insurance companies who insure packages shipped by other couriers.

• Minimum cost of insurance: £1.50
• Cost of insuring an item valued £1,000: £10
• Maximum coverage: £90,000

Royal Mail

While the royal mail is an accessible courier for domestic packages, it is more aimed at the general public than ecommerce vendors.

• Minimum cost of insurance: £6.60
• Cost of insuring an item valued £1,000: £9.70
• Maximum coverage: £2,500

Evri

Formerly known as Hermes, Evri is a commonly used courier for shipping smaller ecommerce packages.

• Minimum cost of insurance: Free for shipments worth up to £20
• Cost of insuring an item valued £1,000: £49 + VAT (via Evri Courier Marketplace Insurance Calculator for a package of 5 kg)
• Maximum coverage: £999 (via Evri FAQs)

Yodel

Much like Evri, Yodel have a compensation calculator to find out how much it would cost to insure their packages.

• Minimum cost of insurance: £0 (increasing with package value)
• Cost of insuring an item valued £1,000: £50 + VAT
• Maximum coverage: £2,500 (for £125 + VAT)

DPD

There is a wide range of different DPD delivery options available on their compensation calculator, but for a 5kg package with door-to-door next-day delivery the values (with an included protection of £50) are:

• Minimum cost of insurance: £0 (increasing with package value)
• Cost of insuring an item valued £1,000: £47.50 + VAT
• Maximum coverage: £5,000 (for £247.50 + VAT)

How do I Get the Best Insurance for My Shipments?

Getting the best insurance for your shipments means understanding the factors involved, as well as where to go in the wide insurance marketplace. Getting support from logistics experts can be the way to go to ensure your packages are protected in a safe, efficient way.

Make sure you get the best all-round shipping service by reading our guide on POS fulfilment >

Shipping insurance is definitely worth it for valuable products, as without it you’d have to cover the cost of reimbursement yourself. For less valuable shipments, you need to figure out the chances something will be damaged and whether that cost is more effectively managed by replacing products yourself or using an insurance provider.

At Allegro, we provide the full logistics service to get your package to the customer intact and on time. We can you secure the best courier for your specific packages, and help you navigate the insurance possibilities. Get in touch to find out more, check out our logistics services for ecommerce, or read on with some related articles.

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