10 Reasons Shipping Insurance Is Essential for Online Businesses
10 Reasons Shipping Insurance Is Essential for Online Businesses
If you have an online business, shipping is an integral part of your operations. Once your customers order your products, you have to ship them to them. However, items sometimes get damaged or go missing. While shipping insurance might sound like a cost you can do without, having it protects you from any problems that may arise during transit.
Without shipping insurance, your company could face tremendous monetary losses. Moreover, unhappy customers could ruin your reputation. That said, better think twice before deciding shipping insurance isn’t for you. Here are ten reasons why shipping insurance is essential for online businesses.
What Is Shipping Insurance?
Shipping insurance is a product offered by logistics companies, such as Unival Logistics, to cover a specific shipment. Its purpose is to protect you against lost, stolen, or damaged packages. You are compensated based on the declared value of the goods you ship if items arrive damaged or don’t arrive at all.
Carriers base insurance on the declared value of the product you ship, with minimum costs and coverage amounts. There are also some payout and coverage caps and requirements for you to be able to prove damage happened during transit.
Shipping insurance typically comes from the carriers themselves, but there are also third-party alternatives. Shipping insurance is most commonly used for shipping expensive products or moving freight since you need coverage beyond the value caps carriers arrange.
How Does Shipping Insurance Work?
Similar to travel or home insurance, shipping insurance is used to resolve any issues that could happen during transit. A business can file a claim to reimburse financial losses if an insured shipment is lost or damaged. Claims can be filed online, through snail mail, or by fax within a specified time frame.
In most cases, damaged shipment claims can be filed instantly upon receipt, whereas lost ones might require a day or more to adapt to any delivery delays. Most claims have to be made within several months of the shipment date.
Any documentation, such as a shipping label, certificate of insurance, photos of the damage, and other supporting proof, will accelerate the claims process. How long the claims processing time takes depends on the insurance provider and can result in being denied, partially approved, or fully approved.
Denied claims will state their reasons for the denial and can be demanded by the business. If a claim is approved, the company will receive its reimbursement soon after.
Why Is Shipping Insurance Essential for Online Businesses?
Customer satisfaction is vital if you want to prevail in e-commerce. Online businesses without any positive feedback often struggle to survive. You may be thinking chances are against something going wrong in the transit. However, roughly 1% of e-commerce shipments are stolen, and more than 5% are damaged during shipping. That said, can you afford to avoid shipping insurance?
1. Protection from Financial Loss
When shipments don’t reach their destinations, merchants often have to refund customers themselves or resend goods. As a result, companies can experience substantial financial losses.
Moreover, the postal service generally offers low coverage for missing or lost packages. Shipping expensive, high-end products make these losses even worse. Nevertheless, shipping insurance is an affordable way for retailers to ensure their high-value products.
2. Package Security
Packages must pass many risky checkpoints while on their way to the final destination. It’s not uncommon for packages to go missing, get damaged, or be stolen in transit. These issues can occur at any time during the transport. In many cases, delivery services don’t reimburse merchants for the losses.
Moreover, many carriers fail to take responsibility for damaged or lost packages. However, with shipping insurance, the insurer handles any damages that may occur in transit.
3. Protection from Catastrophes
Natural disasters can ruin an entire shipment of orders. Shipwrecks, storms, wars, and other hazards can cause unexpected delivery disasters that can greatly affect a merchant. Package insurance protects retailers from the tremendous costs of such catastrophes.
4. Convenience
Convenience is another benefit of shipping insurance. Merchants can track their shipments each step of the way. In addition, retailers can get notifications informing them of parcel status updates, hazards, and delivery failures. They can integrate their current shipping systems to make a single pint of contact for all delivery problems
5. Company Reputation
Product delivery plays a vital role in pleasing customers. When they don’t receive orders or products are damaged, they expect the merchant to fix the issue.
An insurance provider can provide fast and reliable claims processing, allowing merchants to refund or replace orders promptly. With good order processing reviews, your company can build a promising reputation among consumers.
6. Less Paperwork
Retailers can streamline their shipping process with the help of insurance coverage. Shipping insurance companies often provide software that can reduce excessive paperwork. As a result, companies can save money, time, and resources. Meanwhile, an online platform can help merchants handle their shipping systems with a clear overview of transactions.
7. International Expansion
Growing your business on an international scale can greatly benefit your company. However, shipping packages abroad increases the chances of a failed delivery. Parcels can experience challenges passing through customs and foreign postal stations. Nevertheless, packages with shipping insurance are protected during the whole international shipping process.
8. Streamlined Release of Goods
Another concern when shipping packages overseas is a principle known as the “general average”. Some accidents that happen to transport ships demand that all parties involved divide financial losses equally.
As a result, your business might need to pay a tremendous cash deposit to retrieve the shipment. That’s where shipping insurance comes in. It can take over at this point and enable the timely release of your cargo.
9. Customer Satisfaction
Shipping insurance leads to a better customer experience. By ensuring packages, companies can save time and money, enhancing operational efficiency. Customers will enjoy the convenience and reliability that add to a more satisfying shopping experience.
10. Improved Business Intelligence
Your shipping insurance provider can help enhance your business operations with the assistance of intelligent software. The capability to immediately file a claim, review carrier exceptions, and track packages, are some of the benefits of shipping insurance software.
However, companies benefit most from the surplus of statistical and analytical data to discover vital customer insights. As a result, companies can tweak their shipping practices for enhanced operational efficiency.
When Do You Need Shipping Insurance?
If you’re an online business shipping packages to customers, you need shipping insurance. That’s especially true if your products are of high value. The insurance protects your business in cases of unexpected events, such as packages getting damaged, lost, or stolen.
If an insured parcel fails to reach the customer or was damaged before arrival, the shipper will be reimbursed based on the declared value of the product in the package.
