You’ve just ordered some coveted, expensive new tech from an online retailer. But excitement turns to horror as you open the box and realize that the stresses of transportation have damaged your new gadget.
Or maybe you’ve been on the other end, a business owner unsure of how to manage a customer’s lost package—a fate entirely beyond your control.
Reliable shipping is essential to any business’s success. Damage during transit, parcel loss, or porch theft are all potential threats to your customer’s satisfaction and your bottom line. UPS Shipping Insurance makes sure these shipping setbacks won’t set you back. With the 2024 UPS Rate Increase, ensuring the safety and reliability of your shipments has become even more crucial. UPS Shipping Insurance makes sure these shipping setbacks won’t set you back.
What is UPS Shipping Insurance?
UPS Shipping Insurance functions much like the way health insurance covers our medical expenses but for parcels and packages. If you’ve purchased shipping insurance, you are eligible to receive financial compensation for any packages lost, damaged, or stolen during the shipping process.
Benefits of UPS Shipping Insurance
With online shopping on an up-and-right trend, the way your product arrives at a consumer’s residence is an impactful part of their experience with your brand.
Recent studies from UPS Capital demonstrate the ways in which small and medium businesses are impacted by shipping incidents, and therefore could potentially benefit from insuring their deliveries:
- Nearly three-quarters of businesses surveyed report that package loss, damage, or theft resulted in negative customer reviews.
- Nearly half of consumers surveyed preferred insured and guaranteed shipping over less-secure free or expedited shipping.
- 44% of these businesses also expressed an estimate that ensuring their deliveries could result in a revenue increase of up to 20%.
These statistics reflect the potential real-world benefits of purchasing UPS Shipping Insurance, namely:
- Increased customer satisfaction
- Peace of mind for the business/sender
- Protection against a wide range of potential incidents
- Confidence in UPS services
So, for businesses and consumers alike, UPS insurance certainly has its benefits. When considering insurance, there are a few different categories to consider, depending on your needs.
In addition to the benefits of UPS Shipping Insurance, the UPS Service Guarantee offers an added layer of assurance, ensuring that your shipments are not only protected financially but also guaranteed to arrive on time and in good condition, mitigating the risks of delays and further enhancing customer satisfaction.
Types of UPS Shipping Insurance
UPS Shipping Insurance comes in three distinct types. Whether your business is sending small packages locally or shipping large freight internationally, UPS has options to deliver your package safely and reliably.
- Customized Coverage: Customized Coverage is the most flexible option offered by UPS. Custom Coverage lets you choose a single package shipment or multiple shipments, and offers a number of payment options as well. This option works well for small businesses with constrained shipping budgets or medium to large businesses with more advanced operations.
- InsureShield® App for Shopify®: The InsureShield® App allows Shopify businesses to manage all of their package’s insurance through an app. The pay-as-you-go model in the Shopify InsureShield app allows for maximum control over your delivery security. If you’re a business that uses Shopify for your website or e-commerce, consider taking advantage of this feature.
- Single Shipment Coverage: UPS makes it simple to insure any shipment individually. If you’re operating at a smaller scale and need a quick and affordable option to ensure your delivery’s safe arrival, opt for the single shipment option.
Coverage Rate Structures
Depending on the type of shipment you’re sending out, there is a maximum insured value. This is typically higher on freight shipments and multi-package shipments compared to single, small-package shipments.
- For on-demand coverage of single delivery, a freight shipment has a maximum insured value of $100,000 while a small package has a maximum insured value of $70,000.
- For InsureShield Connect or Complete packages, billed monthly, there is a maximum coverage of $100,000 per package, with a maximum coverage of $10M per overall shipment.
- The InsureShield® App for Shopify offers a maximum protection of $10,000 per small package.
How to Purchase UPS Shipping Insurance
So you’ve realized that purchasing UPS insurance is the smartest move for your business and your customers alike. Now it’s a matter of going ahead and purchasing the policy.
- Log into Your UPS Account: Assuming you’ve shipped with UPS before, log into your existing account. If you’re new to shipping with UPS, create a new account.
- Select Your Shipment(s): From your account, it’s time to insert the information about your package or packages. Provide the tracking information and other relevant details for each shipment you’d like to insure.
- Choose the Appropriate Insurance Option: Assess the different types of insurance offered by UPS and select the one appropriate for your business and your delivery. You can choose between single-time payments, weekly plans, and monthly plans, depending on your business volume.
- Enter Shipment Details and Declare the Value: Declaring the value of your shipment is essential in securing proper insurance coverage. Assess the product’s value accurately to make sure you’re compensated correctly in the event of an incident.
- Review and Confirm the Insurance Selection: Make sure that you’ve selected the best option for what you’re shipping. Once you’ve done this, you’re ready to proceed to checkout.
The Claims Process: What to Do if Something Goes Wrong
We hope it never happens, but the time may come when you need to file a claim about a lost or damaged shipment. Here’s how you can make the most out of the insurance plan you’ve purchased and resolve the issue quickly and efficiently.
- Report the Issue Immediately: To make sure your customer isn’t left in the lurch for too long, report the incident as soon as you become aware of it. This allows the insurance company to compensate you in a timely fashion and get you back on track to providing excellent service.
- Document the Damage or Loss: You will likely need to provide proof of the damage, loss, or theft. Additionally, you will need to provide an invoice or other documentation to prove the value of the lost or damaged goods.
- Contact UPS Customer Service: Log into the InsureShield® online portal using your policy number to submit all of your claims and documentation. If you run into problems email capitalus@ups.com or call 877-263-8772 to speak to customer service and resolve any issues that come up.
- UPS Investigation Process: Depending on the way the investigation process unfolds, in addition to proof of loss and invoice or bill of sale, you may be required to submit packing lists, repair estimates, photos of the shipped goods, or freight documentation. In the case of theft, police reports can prove useful in proving the package’s loss.
- Timeline for Claim Resolution: If all the documentation is provided, most claims are resolved in a few days or weeks. If the adjuster requires anything more from you, they will reach out in writing to request the necessary documents.
- Be Patient and Responsive: This process does take some time, so patience is your best asset in the pursuit of compensation for shipping incidents. Quick reporting and prompt response to requests from the insurance adjuster will make sure everything is resolved as quickly as possible.
- UPS’s Liability and Compensation: All UPS deliveries by default assume a maximum $100 liability. For compensation beyond this amount, you will need to purchase a specific coverage plan ahead of time.
Pros and Cons of Using UPS Shipping Insurance
UPS Shipping Insurance can provide security and peace of mind to everyone involved in any given transaction. However, there are times to use it and times to consider forgoing the protection of shipping insurance.
- Pros – UPS Shipping Insurance is especially useful when shipping fragile electronics, valuable artwork, or anything with a value over $100. If there’s a known danger of theft at the point of delivery, then insurance may be worthwhile regardless of the product type or value.
- Cons – UPS Shipping Insurance is valuable, but that value comes at a price. For small, low-cost, local deliveries, the price of a shipping insurance policy may not be necessary or worthwhile. Consider the distance your parcel will travel and the value of the item contained within to decide whether insurance is the right option.
While any delivery can be protected, it’s ultimately up to you as a business owner to decide when the protection is necessary.
Common Mistakes to Avoid
Don’t fall into the common misconceptions around UPS Shipping Insurance. Here are a few to watch out for:
- Misconception #1: Shipping Insurance Protects Against Everything – UPS Shipping Insurance specifically covers incidents that fall under the categories of damage, loss, or theft. Acts of nature, natural wear and tear, or damage that occurred due to improper packing will not be covered by insurance.
- Misconception #2: My Product is Not Valuable Enough to Insure – Any product with a value beyond $100 may be worth purchasing insurance for. Below $100 UPS automatically assumes liability, but this leaves a wide range of parcels worth being insured. Know your products’ value and make sure it’s reflected in the UPS declared value.
Importance of Understanding UPS Shipping Insurance
Understanding the multi-tiered model of UPS Shipping Insurance allows you to make the right decision when purchasing protection for your business’s shipments. There are different options for different types of products, so understanding which level of insurance to purchase is essential.
When you’re ready to purchase an insurance plan for your shipping needs, rely on Lojistic to save you money on your UPS shipping rates. Whether you’re exclusively using UPS or shipping through a variety of carriers, we help you find savings where they’re available to you, so that you can spend more on providing excellent customer care.
At Lojistic, our comprehensive suite of services includes parcel audit, parcel payment, and parcel refunds, among others. These solutions are designed to help you control and reduce your shipping costs, providing a host of benefits for your business.
Explore our virtual demo to see how Lojistic can help your business thrive.
If you're interested in learning more about shipping insurance options beyond UPS, don't forget to check out our comprehensive blog on FedEx Insurance to make an informed choice for your shipping needs.
Sources:
UPS. InsureShield® Shipping Insurance
https://www.ups.com/us/en/business-solutions/grow-your-business-solutions/manage-cash-flows.page
InsureShield. Select My Coverage. https://www.insureshield.com/us/en/shipping-insurance/select-my-coverage.html
UPS Capital. Claims. https://upscapital.com/claims/
Author
Matt Bohn
Matt Bohn
Director of Parcel Rate Services
Prior to his role at Lojistic, Matt held significant positions in the industry, including his tenure as Senior Pricing Advisor at FedEx. Matt analyzed pricing programs and wrote pricing contracts for some of FedEx’s largest e-commerce and retail shippers. He also managed projects for the FedEx Global Pricing Approval Systems and Strategic Account Executive Inputs.
Matt earned a BS in Computer Engineering and an MBA in Finance from the Joseph M. Katz School of Business at the University of Pittsburgh.