What Is Shipping Insurance?

kase
Oct 30 2024

Shipping is a critical operation for many businesses of all sizes. Whether you're sending products across the country or across the globe, your goods are vulnerable to loss, damage, and theft in transit. Shipping insurance safeguards your physical or e-commerce business from these risks, providing financial protection and peace of mind.

But what is shipping insurance? This type of insurance covers the declared value of your shipments if they are lost, damaged, or stolen while in transit. It's an essential tool for mitigating risk and ensuring business continuity in the event of unexpected shipping mishaps.

This blog post provides a comprehensive overview of shipping insurance. We'll explore its benefits and answer questions like, “What does shipping insurance cover?” and “How do you choose the right policy for your business?” By understanding this critical aspect of business logistics, you can make informed decisions to protect your shipments and bottom line.

Understanding What is Shipping Insurance 

What is shipping insurance? You can think of it as a safety net for any business that sends goods to customers or other companies. Shipping coverage protects against financial losses if those goods are lost, damaged, or stolen during transit

It covers the declared value of the shipment, including the cost of goods and shipping expenses, up to the insured amount. If an unforeseen event occurs, such as a truck accident, a natural disaster, or theft, you can file an insurance claim with your insurance provider to recover the financial loss.

Who Needs Shipping Insurance? 

While shipping insurance can benefit any business that ships goods, it's particularly crucial for those who:

  • Ship high-value items: If you ship expensive products, such as electronics, jewellery, or artwork, damage or theft could result in significant financial losses. Shipping container insurance is one way of protecting your investment.
  • Ship fragile or sensitive goods: Items easily damaged in transit, such as glassware, ceramics, or perishable goods, require extra protection. Shipment insurance can cover the cost of replacing or repairing easily damaged items.
  • Ship internationally: International shipping involves more complex logistics and a higher risk of delays, damage, or loss. With shipping insurance, Canada goods are protected as they are sent overseas or across international borders. 
  • Rely on e-commerce: Online retailers that ship goods directly to customers rely heavily on efficient and reliable shipping. Shipping insurance protects their business in the case of unexpected problems, resulting in customer satisfaction. 

Shipping Insurance vs. Carrier Liability 

Most carriers, such as shipping companies or trucking companies, already have carrier liability insurance. Is there a difference? Do they need shipping insurance too?

Carrier liability insurance is usually based on the weight of the shipment rather than its actual value. This limits carriers’ liability for loss or damage to the goods they transport. Shipping coverage provides additional protection, ensuring that you're fully covered for the actual value of your goods.

Ecommerce business owner calling insurance company for coverage and shipping insurance costs

Image Source: Canva

Benefits of Shipping Insurance for Businesses 

Many see shipping insurance as an added expense, but this valuable investment saves businesses money in case of accidents. Here are some key benefits of protecting your shipments:

Financial Protection 

If your shipment is lost, damaged, or stolen in transit, shipment insurance can reimburse you for the declared value of the goods, covering your costs and preventing a financial loss. This is particularly important for businesses that ship high-value or fragile items that are susceptible to certain risks while in transit.

Enhanced Customer Satisfaction 

When a customer's order is lost or damaged during shipping, it can create a negative experience and damage your brand reputation. Shipping coverage lets you resolve these matters quickly by reshipping the order or providing a full refund, resulting in greater customer satisfaction and loyalty

Reduced Stress and Hassle 

Dealing with lost or damaged shipments can be time-consuming and stressful for business owners. Shipping insurance takes the burden off your shoulders, allowing you to focus on your core business operations while the insurance provider handles the insurance claim process.

Improved Business Continuity 

Unexpected shipping mishaps can disrupt your business operations and lead to delays and lost revenue. Shipping and cargo insurance coverage helps mitigate these disruptions with financial compensation so you can quickly recover and continue fulfilling orders.

Competitive Advantage 

Offering reliable shipping and hassle-free resolutions to shipping issues can give you an edge. Shipment insurance lets you provide high-level service and build a positive brand image. The added peace of mind will increase your customers’ confidence in your business.

Damaged cardboard shipping box on a wooden floor

Image Source: Canva

Types of Shipment Insurance Coverage Available 

There are a variety of coverage options for shipping insurance to meet businesses’ diverse needs. It’s important to ask “what does shipping insurance cover?” and understand the different options to select a policy that aligns with your specific shipping needs and risk tolerance.

  • All-Risk Shipment Insurance: This is the most comprehensive coverage option, protecting your shipments against a wide range of risks, including loss, damage, and theft. It's suitable for businesses shipping high-value, fragile, or sensitive goods.
  • Total Loss Shipping Insurance: This basic coverage with the lowest shipping insurance cost only protects against the complete loss of your shipment. It's a more affordable option for businesses shipping low-value goods or those comfortable assuming the risk of partial losses.
  • Named Perils Insurance: This type of coverage offers a middle ground, protecting against specific perils listed in the policy, such as fire, collision, or theft.

Beyond these common options, specialized coverage is available for unique or high-value items, such as fine art, jewellery, antiques, or temperature-sensitive goods.

When selecting a shipping insurance policy, consider factors like the value of your goods, the shipping destination, the mode of transportation, and the carrier's liability limitations. For example, international shipments often require more extensive coverage due to the increased risks. Similarly, shipping by sea may necessitate specialized coverage for maritime perils.

Get The Shipping Insurance You Need With KASE Insurance 

Now that we’ve answered the question” what is shipping insurance?” and explained how it can protect your business from financial loss, you can take the next step and choose the right coverage for your specific needs.

As an award-winning insurance broker, KASE Insurance is your trusted partner in navigating these complexities. Our team of experienced professionals can help you understand the different types of shipping insurance, assess your unique requirements, and tailor a comprehensive insurance plan that provides optimal protection for your valuable shipments.

Don't let your shipments set sail without a safety net. Contact KASE Insurance today for a free consultation.

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