If you have an ecommerce store and ship to customers all the time, you know that mishaps can happen during shipping. Through no fault of your own, packages sometimes get damaged, lost, or stolen. And unfortunately, if a package is lost, sometimes it never gets found, at least not in time to get into your customer’s hands. Having shipping problems is just one of those things you plan for with an ecommerce business.

No one wants to see tears in your grandchild’s eyes because the gift they ordered arrived smashed into smithereens. As a seller, your first priority is working with your customer to get a replacement item shipped out to them ASAP.

But, it’s not your customer’s fault the package went missing. And it’s not your fault. It might not even be the shipper’s fault. Things can go wrong, so you need to be prepared in case one of your orders doesn’t quite make it into your customer’s hands. This exact situation can happen even if you take every precaution when packaging an order, and then shipping it with your favorite shipping company that you’ve done business with for years. It even happens with a customer that’s been purchasing from you all throughout the pandemic. Stuff happens. This is what holiday shipping insurance is for.

What is Shipping Insurance?

Shipping insurance is designed to pay the insured party for the declared value of missing, damaged, or stolen shipments. This insurance can be purchased by the seller or by the customer. If the seller pays for holiday shipping insurance, they usually receive the declared value of the items sent. Customers usually get reimbursed with a refund or a no-charge reorder.

Why is Holiday Shipping Insurance Important?

Shipping insurance is important all year long. Insurance goes a long way to protecting your bottom line. If one of your shipments is lost, you don’t have to lose out on the cost. But the holiday season adds a new level of shipping issues.

In 2020 and 2021, the number of people ordering online has increased in huge numbers because of people social-distancing at home. In 2021, as businesses are reopening, we are seeing a shortage of people available to work in a lot of industries, and shipping is one of them.

What that means for sellers and customers, is that people are still placing a higher percentage of orders through ecommerce businesses right now. During the Christmas shopping season, the number of orders will increase like it does most years. But, shippers are relying on an insufficient number of employees to get shipments processed, delivered on time, and to the right destination. And to top the pile of what-ifs, the U.S. Postal Service changed their standard delivery times and fees starting October 1, 2021. While the majority of packages shipped during the holiday season will go where they should, it’s best to be prepared for some that don’t.

How Can Holiday Season 2021 Affect Your Brand?

You have spent the entire year working to promote your brand, and letting people know how great it is. You have spent money and time marketing and advertising to your target audience. Now, it’s holiday season 2021, usually the time of year you sell and ship the most.

How can all the special circumstances and shipping changes affect your brand?

Well. A lot, really. They can affect your holiday sales and profits a heck of a lot. So what is an ecommerce business owner to do?

The answer is:

Make a Holiday Season Checklist, and check it twice, so shipping deadlines and ecommerce holiday readiness 2021 go as smooth as ice.

Shipping Insurance from Major Carriers

Some domestic carriers automatically add shipping insurance to most packages.

  • UPS – All packages are insured to $100
  • FedEx – All packages are insured to $100
  • USPS Priority Mail – Up to $100 Commercial Plus Pricing (CPP), $50 Customs and Border Protection(CBP)
  • USPS Priority Mail (international), Priority Mail Express (domestic and international) – Up to $200
  • USPS First Class Mail (domestic and international, Media Mail, Parcel Select – No insurance

There are limits to carrier insurance, and maximum limits you can buy through each service. Some items that aren’t insurable, including currency, gemstones, and hazardous materials. Some high-value items aren’t insurable for their full value. For instance, a flat-screen TV is only insured for $1000.

What’s the Difference between Buyer vs. Sender Shipping Insurance?

Shipping insurance comes in two main categories – buyer and seller insurance. This denotes who is funding the insurance, the customer who is buying the product, or the seller who is shipping the product. The way it works is like this:

Buyer Shipping Insurance

  • This insurance is paid for by the customer when checking out. Customers have the option of adding shipping insurance to their shopping cart, and it is charged on their credit card (or another form of payment). This type of charge is usually about 1.5% of the order price and it protects the buyer from damaged, stolen, or lost merchandise. Ecommerce stores can offer opt-in or opt-out choices for insurance. Customers can add with opt-in or decline with an opt-out at the time of purchase.

Sender Shipping Insurance

  • This insurance is funded by the seller and included with every shipment. Since sellers are typically responsible for a package until it’s in the customer’s hands, sender shipping insurance has become more popular. The pandemic has made this even more necessary due to stock shortages, and unpredictable shipping bottlenecks. While a seller may try to have their fulfillment partner pay for this insurance, doing so can cause even more issues with the end customer, making them frustrated and unhappy when they are already upset about a package delay.

Shipping Carrier Insurance vs. Third-Party Insurance

Shipping carriers like UPS, FedEx, or USPS are not really in the insurance business. They are in the shipping business, so having insurance is a feature that they offer, but only reluctantly. Similar to a scenario where you are visiting your boyfriend’s parents for the holidays. You don’t want to, but you do it to keep him happy.

You don’t pay too much for carrier insurance, and they’re usually reliable. But you have to jump through a lot of hoops to get reimbursed. Plus, you may not get reimbursed for any of these reasons.

  • Loss or damage that occurs after delivery, like neighborhood theft
  • Goods damaged because of poor packaging
  • You can’t find the insurance paperwork
  • Perishable items go bad enroute
  • You don’t claim it before the deadline

Shippers are in no hurry to process claims, so it takes weeks to get reimbursed. Additionally, it’s not fun to put in a claim, due to lots of paperwork and tedious forms. The whole process leaves you with a bad taste in your mouth and colors your opinion of the vendor you bought from.

Shipping Insurance Costs

Paying carrier insurance costs can add up quickly, cutting into your profit margin. Even so, in many cases, it’s worth your company covering the insurance and dealing with the paperwork in the event of a claim. You can then protect your brand’s reputation with your customers.

Shipping insurance for USPS starts at $1.65 for $50 value to $4.60 for up to $300 value. FedEx charges $3 for $100.01 to $300, then another $1.00 for every $100 value after $300. Other shippers have similar charges.

Ordoro Offers Shipping Insurance

Ordoro offers shipping insurance for sellers that costs less and is easier to use.

Unlike most matters related to insurance, our pricing is straightforward. Expect to save between 40% to 60%, and enjoy discounted coverage throughout every holiday season.

Ordoro facilitates insurance at excellent rates for sellers, with the added ease of use. Instead of being a tedious backlog of paperwork for you, Ordoro’s insurance is part and parcel of order fulfillment software. You can apply insurance to orders, and make claims as part of the core workflow. The process can also be automated to save you time and money. It’s really a win-win all the way around.

Need Shipping Insurance?

Is shipping insurance worth it for holiday season 2021? Do you have the best shipping insurance to protect your company and your customers? You can find out more about holiday shipping insurance by contacting us.