Traditional Shipping Insurance Vs ShipInsure

When you regularly ship packages to customers or clients, getting some form of shipping insurance is just a smart business move. After all, without any form of insurance on shipped items, you could be forced to payout reimbursements if a package is lost or damaged in transit. According to Packaging Digest, anywhere between 2% and 11% of packages arrive at distribution centers with some level of damage. In 2021, the New York Times reported that as much as 15% of online shopping deliveries never reach their destination due to theft or logistical issues.


Even if you use conservative estimates, this means that, without shipping insurance, you would have to pay for 8% of your shipped packages due to theft or damage. For online businesses that rely exclusively on the profits from shipping products, paying for 8% of the merchandise could be catastrophic. Fortunately, you can avoid this issue entirely with shipping insurance.

Many businesses opt for the insurance provided by major carriers because it seems like the simplest option. But are you really getting the best deal when you choose traditional shipping insurance? Or could you end up saving time and money by choosing a third-party insurance provider like ShipInsure? In today’s guide, we will examine both options to help you choose the best shipping insurance solution for you.

Canva Design DAFWuuijoOYShipping Insurance Cost

Based on aggregate data from major carriers and third-party shipping insurance providers alike, Intuit estimates that shipping insurance costs anywhere between 1.5% and 4% of the value of each package. However, this doesn’t tell the whole story. In truth, most major carriers use more complex figures to calculate the cost of shipping insurance per package. Consequently, if you want to find the best shipping insurance available, you’ll need to look at the actual figures that each provider charges.


Untitled design 2For example, the United States Postal Service (USPS) offers shipping insurance starting at $2.60 (as of 2022). This amount only applies to shipments up to $50 in value. For shipments between $50 and $100, the cost of insurance through USPS goes up to $3.35. This means that shipping less expensive items will cost you 5.2%, while slightly more expensive items will cost you 3.35%. All packages above $100 will still cost $3.35, plus an additional $1.40 per $100 in added value. Therefore, you only get a good value on USPS shipping insurance when you’re sending high-ticket items. Otherwise, you’ll have to pay a high price to insure your shipments.

 Fortunately, private carriers are not quite as expensive. For instance, both FedEx and UPS allow you to get shipping insurance free of charge on all packages up to $100. If your packages are valued above $100, FedEx charges $1 per $100 of value, with a minimum charge of $3. Alternatively, UPS charges $1.05 per $100, with a minimum charge of $2.70. So, FedEx and UPS only charge competitive rates on shipping insurance if you have shipments below $100 or well above $100. For instance, if you’re shipping items that are just slightly above $100 in value, you can expect to pay just under 3% for shipping insurance through either carrier.

 In most situations, ShipInsure comes out cheaper than USPS, FedEx, UPS, and most other shipping insurance providers. ShipInsure charges $0.98 on any order under $100 and just 1% on orders above $100. This is substantially cheaper than USPS, and if you’re shipping orders that are valued above $100, it is also much cheaper than FedEx and UPS.

 However, ShipInsure is also cheaper for businesses because it passes the costs of shipping insurance on to the customer by default. If your business ships with USPS, FedEx, or UPS, you’ll need to charge more to account for the shipping insurance costs. With ShipInsure, the customer can choose to pay for ShipInsure coverage at checkout. As a merchant, this means you can benefit from comprehensive shipping insurance without having to pay exorbitant fees on each package. Since the rates are also substantially cheaper than the current market rates, it also means that your customers won’t have to pay much to have their packages insured either.

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 If you’re still on the fence about the costs of ShipInsure, you can use the ShipInsure calculator to get an estimate of the total shipping insurance costs right here.

Your paragraph textShipping Insurance Coverage

Shipping insurance generally covers any case of loss, theft, or damage that occurs between the time that the package leaves its origination point and the moment it arrives at its destination. Unfortunately, this means that major providers like USPS, FedEx, and UPS do not provide protection from one of the most common culprits: porch pirates. In recent years, porch theft or “porch piracy” has accounted for millions of dollars in stolen goods. Since traditional shipping insurance doesn’t protect against it, either consumers or businesses are on the hook to pay for the theft.

 Alternatively, ShipInsure offers shipping coverage during the entire period that a package is in transit, as well as the period before it has been picked up by the recipient. This means that, unlike nearly all other shipping insurance providers, ShipInsure protects against porch theft based on the declared value of the package. Customers who have opted into ShipInsure coverage simply need to make a theft claim and let ShipInsure handle the rest.

Canva Design DAFWu6XuosgShipping Insurance Claim Process

Filing a claim through USPS, FedEx, UPS, and other major carriers can be notoriously convoluted and time-consuming. The claimant will need to provide a lot of information, documentation, and potentially even photographic evidence to receive compensation. For this reason, many customers give up on the process altogether or seek reimbursement from the business that sold them the product.

 Fortunately, ShipInsure offers a streamlined claims process, as all of the info related to the order (including its value) is already stored within a preset ShipInsure ID. As a result, a typical ShipInsure claim takes just under 90 seconds to be completed. Not only does this keep your customers happy, but it also saves you time and money on the staff hours that would normally be required to handle shipment issues.

Protect your packages

Creative Infographic & Layout TemplateIncreased AOV With ShipInsure Shipping Insurance

Average Order Value (AOV) is one of the most important metrics used to calculate an eCommerce business’ gross revenue. If your business frequently has to pay for lost or damaged packages out of pocket, your AOV will take a nosedive. Fortunately, businesses that put their trust in ShipInsure see an average AOV increase of 27%. To estimate how much you could save with ShipInsure, be sure to check out the ShipInsure ROI calculator.

The Bottom Line

As you can see, ShipInsure stands as one of the most advanced, cost-effective, and user-friendly alternatives to traditional shipping insurance solutions. While some major competitors like UPS and FedEx may offer cheaper solutions on low-value shipments, their costs get increasingly expensive as the value of your orders increases. This is not the case with ShipInsure. More importantly, ShipInsure takes care of claims on behalf of your business, reaching resolutions in a matter of minutes. When you also consider the added value of protection against porch theft, it is abundantly clear that ShipInsure offers better package protection than any other provider on the market.  


Is your business looking for a better way to insure shipments? If so, be sure to reach out to the experts at ShipInsure today!

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About the author

Morris Matalon

Morris Matalon is a business writer in his free time. He has a BA in finance from CUNY Brooklyn College. Currently Morris is expanding his business career by helping start a company. He also enjoys the opportunity to write on a variety of business topics. In addition to writing he enjoys fishing, smoking meat, and watching football.