What is the Shipping Insurance in eCommerce?
When it comes to the eCommerce business, shipping is an important aspect that may make or break your business. As eCommerce is all about ordering the product electronically and then delivering it to the customer, shipping is of utmost importance. Without having the right shipping and delivery strategies in place, you will not be able to satisfy the customers and create goodwill. So, what if the product goes missing or is damaged in the course of shipping?
There are always chances of unforeseen circumstances that we do not have control of. This is where shipping insurance comes into play.
As per the definition, this is what a shipping insurance means:
Shipping insurance is a service given by the insurance companies to give protection from financial losses to the parcel senders whose couriers are lost, stolen, or damaged in transit. In simple terms, the insurance company will reimburse your financial loss caused due to the loss or damage of your product/parcel during its shipping.
While a lot of eCommerce businesses tend to do away with the concept of shipping insurance, but having a proper insurance coverage in place that prevents you from an undue loss that you can incur due to exigencies or unforeseen circumstances. Shipping insurance gives you that additional security coverage that helps you to deal with emergency revenue losses.
According to a survey, businesses tend to lose around 3 to 5 percent of their revenue due to shipping losses. Well, that is a significant amount indeed and having the right insurance can help you get rid of that loss.
Factors to consider before taking the Shipping Insurance
Before you decide whether to opt for shipping insurance, there are certain things that you need to keep in mind. Accordingly, you can decide on the right type of insurance based on your preferences and budget.
- First things first, you need to have an idea of which items can be insured and which cannot. There are some items, such as FMCG goods that usually do not come under the coverage of shipping insurance. In the same way, currencies, hazardous materials, and gemstones can’t also be insured. Before opting for insurance, it is important to know whether the item can be insured or not.
- Secondly, read the terms and conditions of the insurance company with care. Each company has its own terms and conditions where all the restrictions and limitations are clearly defined. These factors differ according to the type of insurance coverage that you opt for. Accordingly, you would need to opt for the ideal insurance coverage.
- Thirdly, you need to have an idea of the value of the shipment. It is perhaps of no use to get insured a shipment of a negligible amount. However, for valuable shipments, insurance is essential.
What is Shipping Insurance Coverage?
Shipping insurance coverage consists of the various items and clauses that are offered in the insurance policies. The coverage differs as per the insurance policy and companies. Businesses need to judge the coverage policies properly and make proper planning.
There is some basic coverage in shipping insurance that is offered in all policies. The secondary clauses differ according to the type of product, the type of shipping medium and the destination.
Some of the clauses that may be a part of the shipping insurance package are:
- Compensation in case of financial loss for loss or damage of the product.
- Compensation in case of undue shipping expenses.
- Whether the shipping insurance is applicable outside the country of origin.
- Reimbursements in case of loss of important shipping documents.
How to claim Shipping Insurance?
If your face any loss or damage of the product, you will need to file a claim to get the insurance reimbursement. Ensure that you have all the necessary documentation in place for making the claim. Once you successfully send across the claim and it is accepted, you will get the reimbursement within a period of time. This period depends according to the insurance company and the coverage.