Don't Risk Losing Your Freight: Insure It!

Tips and Trends

Mar 11

Statistics show cargo loss is a significant issue for businesses, costing an estimated $50 billion annually. Shipping insurance can help protect a company and its customers from these losses.

Insuring your freight against theft and loss is essential to protect your assets. Purchasing insurance is a wise decision as it ensures that your operations run smoothly in the event of an unforeseen incident.

Keep reading to learn what freight insurance is, the types of shipping insurance available, its costs, and to answer the question, "is shipping insurance worth it?"

What is Shipping Insurance?

Shipping insurance is a type of insurance that helps retailers get reimbursement in case their shipment or products are damaged or lost. It's available for both domestic and international shipments.

Shipping insurance typically covers the cost of replacing or repairing your items and the cost of shipping them back to you. Definitely consider insurance for any high-value shipments. It's well worth it.

Most shipping carriers offer insurance. If it's not evident on their website, make sure and ask.

Types of Shipping Insurance

There are several shipping insurance types. When choosing shipping insurance, it's essential to consider your business' specific needs. Some things to consider are:

What is the value of the shipment?
Is the shipment insured by the shipper or the freight carrier?
What are the terms and conditions of the policy?

1. LTL Carrier Insurance

LTL carriers have standard baseline coverage for every shipment that they handle. Rates for LTL insurance depend on factors like class, packaging, and commodity type.

The responsibility for freight loss, damage, and delay is carrier liability.

When carriers cannot meet their shipping obligations, they must compensate customers for losses incurred by late deliveries or lost and damaged shipments. Keep in mind that the carrier's liability usually does not cover the entire cost of your goods.

2. Third-Party Insurance

This is an insurance agreement between the shipper and a third-party service.

Third-party insurance is beneficial for both the shipper and the receiver. It gives both peace of mind and protects against losses or damage.

Third-party insurance costs extra and, on average, has a $500 deductible. However, claims process quickly and are more significant than LTL insurance.

Reasons why third-party shipping insurance might be a good idea include:

The shipper does not have enough cargo coverage from their insurance policy to cover the shipment.
The receiver requires proof of insurance before accepting the delivery.
The goods are high-value or perishable.
There's a risk of damage or loss during transport.

3. Truckload Insurance

Lastly, there's truckload insurance. Truckload shipping is a type of freight transport for oversized shipments. These shipments can range from a few pallets to an entire trailer.

Because of the size and weight, they require a specific type of insurance.

Truckload insurance protects the shipper and the cargo against damage or loss while in transit. This policy typically covers the total value of the shipment and any extra costs associated with the transport, such as freight charges or storage fees.

Why Is Insurance Important?

There's nothing worse than receiving a broken package or not receiving it at all. Insurance is essential to remove the risk in case something unforeseen happens. With insurance, all parties have peace of mind and protection from loss or damage.

Here are a few stats that reinforce the importance of insurance:

According to Statista, 80.2% of consumers say they return an item ordered online because it arrives broken or damaged.
Worldwide, between 29% and 73% of consumers report returning a product purchased online.
Depending on the product, customers return between 8% and 88% of products from eCommerce stores.

What Determines Shipping Insurance Cost?

Four main factors affect how much you'll end up paying for coverage. They are:

Volume: The weight and size of the package
Distance: The destination, international vs. domestic
Type of Product: Shipping services needed
Claims History: More claims, higher premiums

Conclusion: Is Shipping Insurance Worth it?

The question remains, is shipping insurance worth it? After learning all the facts presented here, there's no doubt. Shipping insurance is a wise investment.

It protects your company from any potential losses arising from the shipping process. Researching and finding the right policy that fits your needs is essential. Also, compare rates and coverage before making a decision.