We might think of it as another way package carriers and online retailers nickel-and-dime us after we’ve already invested in our purchase. Package insurance. There are a number of different ways that we can get our package insured. First, like all insurance, any sort of package insurance does nothing to prevent the worst. Just because I have auto insurance doesn’t mean I won’t get in a wreck. Instead, it bets on the worst not happening and does as little as the insurance company can get away with to compensate you if it does. So, package insurance does nothing to prevent package theft. It’s the consolation prize of the shipping game. That said, there are a few options. Most carriers offer an option to declare the value of the contents of a package. Usually, they cover the contents up to a certain value ($50 for USPS and $100 for FEDEX and UPS) and offer additional insurance beyond that for a premium. Additionally, most renters’ and homeowners’ insurance policies will cover stolen packages (and stolen luggage when you’re travelling). Finally, companies like Shipsurance, U-PIC Insurance, and Parcel Insurance Plan offer insurance that covers packages shipped through any carrier.
It’s important for a consumer to read the long and boring terms of any of these services very carefully (you should be doing that anyway) and be prepared to go through a sometimes lengthy claims process that can take up to a month. Beyond this, there are limitations on what is covered in various shipping policies, and usually, documentation must be provided within a limited time frame to make a claim. What’s more, if you have a signature release on your address or if the carrier marks the package delivered, you’re often out of luck. In future posts, we’ll be discussing the process of filing a claim with each of the major package carriers, as the process is pretty complicated (think filing taxes).
Homeowners’ and Renters’ insurance also often covers stolen packages. Since there is so much variance between policies, it’s an important thing to investigate when you’re shopping for a policy, and once you have a policy, it’s worth looking into. Seriously, read the terms and conditions…if they’re impenetrable like they always are, get someone to translate the legal language. However, frequently there are limits to how much these insurance policies will cover. Each insurance policy is different, and it’s important to pay attention to deductibles. If you’ve ordered a $600 laptop but the deductible is $1000 (as most are), then filing a claim may not help much (I know, right…and we’ve been paying all that money for insurance each month).
Finally, third party insurance specifically for packages can be useful, particularly if you’re receiving a lot of packages. This kind of insurance is also important for packages that carrier insurance won’t cover like jewelry, precious metal, gemstones, cash, and other similar items. While these third party insurers do have exclusions to their policies, they have fewer of them that other insurance options. Generally, third party insurance rates are calculated based on the volume and value of packages being shipped (using a calculus that makes sure the insurance company stays profitable).
In the end, package insurance is a good consolation prize for losing the shipping game (not a very nice consolation prize, either). It can help you reclaim some of the value from your stolen package (after a sizable delay), but it often comes with many conditions and inclusions, and a sometimes lengthy claims process is involved. While this kind of insurance is important, and being educated on it is equally so, we should maybe see this as the second option and focus our attention equally on preventing package theft in the first place.