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July 27, 2021

Insurance for Your E-Commerce Shipments: What It Is & When You Need It

Receiving a damaged package through commercial shippingE-commerce is growing more popular — and more trusted. Consumers are more and more willing to buy increasingly expensive items online. Where once people would only buy electronics and furniture in person, they now turn to online stores. This shift is great for e-commerce business owners; however, it's also a liability. The more expensive the item you ship, the more you stand to lose if it should get damaged in transit. The question becomes, how do you know when you need e-commerce shipping insurance? We'll break it down to help you figure it out.  

What Is Shipping Insurance?

Shipping insurance is a way to cover any losses you may suffer if your e-commerce shipment is lost, stolen, or damaged so that you don't have to pay to replace it. Most major carriers offer some kind of shipping insurance. But you can also buy insurance for your e-commerce shipments through a third party.  

How to Know If You Need Shipping Insurance

The first question to ask yourself as you determine if you should get insurance for your e-commerce shipments is this: are your shipments worth more than $100? The reason for this is that most carriers will cover shipments worth up to $100 automatically without the need for shipping insurance.

So, if you ship mostly $100 items or under, you likely won't need to get insurance. However, if you ship items worth more than that, then you should consider getting extra protection. Remember, not all carriers take responsibility for items under $100 by default, so always check to verify that yours does before you count on that.   

How Much Does Shipping Insurance Cost?

Every carrier has different rates for their shipping insurance. The cost also depends on the value of the shipment. We'll list some of the major carriers and how they price their shipping insurance to give you an idea of what to expect.


USPS doesn't cover items up to $100 by default unless you're shipping via Express Mail. So be careful not to assume that anything under $100 is always covered. Here are the rates for USPS insurance for your e-commerce shipments:

Value of $50 or less: $1.65

Value from $50.01-$100: $2.05

Value from $100.01-$200: $2.45

Value from $200.01-$300: $4.60


FedEx does cover shipments up to a value of $100, so you'll only need insurance for shipments with a value higher than that. For shipments above $100, you must declare the value of the package and pay the correct insurance rates. These are the rates to provide insurance for your e-commerce shipments through FedEx.

Value up to $100: $0

Value from $100.01-$200: $1

Value from $100.01-$300: $3


UPS handles its pricing differently. Rather than having different insurance rates for different price ranges, the company will cover anything up to $100. Then you pay $1.05 for every additional $100 in value. So, if a shipment is a $600 value, you'll pay $5.25 to insure it.


DHL has the same rates as UPS. They'll cover shipments up to a $100 value. Then you pay $1.05 for every additional $100 in value.

What If I'm Shipping More Than One Package?

When shipping multiple packages, you have to handle each one individually. You cannot insure the combined value of different packages; you need separate insurance for each one. Keep that in mind when thinking of insurance costs and how they'll add up.

What Are the Limitations of Shipping Insurance?

Every carrier can have different exceptions and limits on their insurance, so make sure you read all the terms and conditions and ask any specific questions you may have beforehand. In general, though, insurance for your e-commerce shipments may not include certain items, like cash or gems. Many carriers consider this too high risk and don't cover it.

Additionally, some shipment destinations may not be covered, depending on the carrier. They also may not cover a shipment that was damaged due to poor packaging if you packed it yourself. This obviously doesn't apply to shipments that the carrier packed for you. In addition to exclusions, they may have limits on the amount of insurance for specific items. FedEx, for example, won't cover artwork over $1,000.   

What Else Should You Know?

In addition to those details, there are some other things you should be aware of before getting insurance for your e-commerce shipments. Here are some details that it's important to remember:


When it comes to shipping insurance, timing is a big issue. Each carrier has a different policy about how long you can wait before filing a claim. The times can range anywhere from as little as 15 days to as much as five months. So know what your policy says, and make sure to file your claim before their deadline to avoid losing all that money.

Declare Your Shipment's Value

When your package is valued at over $100, you have to declare the value of the package to get the right insurance. If you forget to declare the value of a package over $100 and the item is lost, stolen, or damaged in any way, the carrier may not be responsible for replacing it. The same goes for declaring the wrong value.  

Why Should You Have Insurance for Your E-Commerce Shipments?

Business owner with peace of mind after learning about insurance for your e-commerce shipmentsBeing an e-commerce business owner has enough hassles and costs associated with it. The last thing you need is to pay for items twice on top of everything else. Here are some of the benefits of having insurance for your e-commerce shipments.

Financial Security

Many people wonder if the cost of shipping insurance (on top of regular shipping costs) is worth it. They think that maybe if they forgo shipping insurance, considering the number of packages they have to ship, that the savings would quickly add up to reduce shipping costs by quite a sizable amount of money. This might very well be the case. If you've never had a problem with a lost or damaged package, you may not immediately see the value in spending that money.

However, consider this. What if you ship numerous packages and something happens to them all? If the carrier's truck is in an accident or something falls on a pile of boxes, or several happen to be lost or stolen at the same time, could you afford to replace them all? This is obviously a worst-case scenario. However, it clearly illustrates the value of insurance for your e-commerce shipments.

The more valuable the individual shipments are, the more of a risk you take by not having any protection at all. Just a few lost or stolen items could severely impact your bottom line, while the insurance is actually quite affordable.  

Less Fear and Worrying

If you don't have insurance for your shipments, you'll constantly have to worry about unexpected costs in the case that something does happen. Having insurance means knowing that, no matter what should happen, you won't have to pay for the item out-of-pocket. The carrier takes care of everything, and you can relax knowing that you're completely covered for whatever may come.

The Bottom Line

For the sake of your business, it's always better to be protected. Not having insurance for your e-commerce shipments just isn't worth the risk you'd be taking. It's also important to remember that there's no across-the-board standard for shipping insurance. Every carrier will have different terms and restrictions, as well as different rates. It's vital that you be aware of what they are so you know what's covered and what isn't.

If you have any questions about shipping insurance or how we can help you with your e-commerce shipping needs, please contact us today!

About Eniture Technology

Eniture Technology specializes in helping e-Commerce merchants grow by providing useful information, digital marketing services, off-the-shelf apps that solve common problems, and custom programming services. Please contact us if you need help growing your online business or implementing the concepts presented in this blog post.

Interested in learning more? Check out our free guide, A Beginner's Guide To E-Commerce Shipping and subscribe to our blog!

A Beginner's Guide To E-Commerce Shipping


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