About Insurance


When you fill the space on a shipping bill that says value you are asking to purchase that amount of shipping insurance. Various carriers handle the question of their shipping insurance liability differently.

When you tender a box to UPS or FedEx or to most other parcel carriers, the carrier assumes you know how to pack and that you have packed the contents correctly. If damage occurs due to improper packing, the responsibility is yours. (ie The carrier won’t pay a claim.)

As a rough rule, if merchandise is damaged but the shipping box is unharmed (or only mildly scuffed) it is assumed the damage was caused by improper packing and no claim will be paid. If the shipping box has been thoroughly trashed, you are, probably,entitled to have your claim paid. For computers, if the case is unscathed but the hard drive doesn’t work, it is assumed the hard drive died of natural causes during transit. No claim will be paid.

There is a large middle ground in which the box is mildly damaged and the contents broken. Generally, in this middle ground, claims should be paid if the packing appears to have been done correctly. That is:

  • Adequate padding
  • Fragile items (glass, ceramics, electronics) double boxed.
  • All boxes new.
  • The box was not overloaded. That is, the weight of the box plus contents did not exceed the weight rating printed on the bottom of the box.

Sometimes, UPS will pay small claims (less than $200) even if the packing is not completely correct. Higher value items are expected to be packed correctly.

Some items have what is called intrinsic vice which means they are just too fragile to be shipped. Claims will not be paid on these items. Here, in Denver, much of the hand blown ornamental glassware from Mexico must be shipped at your own risk, they will not have shipping insurance. Home made pottery may fall into this category.

Fragile items worth over $5,000 are handled somewhat differently.

First, to collect a claim, you must be able to document the value. It would be a good idea to get a formal appraisal before shipping the item. A recent bill of sale from a large store is probably sufficient.
Do not be careless about this paper work. It is useless to get shipping insurance for a priceless family heirloom for $8500 and not have documentation of value.

If the box simply disappears in transit, the carrier ought to pay the claim. If the box was dropped off at your house while you are at work (ie without being signed for) and stolen before you come home, the carrier is still liable for the loss.

Trucking companies handle damage differently. They accept full responsibility for any damage to brand new merchandise up to the declared value. If they accept goods for shipping, they have tacitly approved the packing. (They tend to be pretty liberal about what is acceptable packing because they want the freight business.) However, used household goods are placed in a special class of freight (called FAK 100 . . Freight, All Kinds, class 100) Goods in this class are insured only for 10 cents per pound — essentially uninsured.

Usually, all goods brought in to a trucking company by a private individual are shipped as used household goods — so they are, in effect, without shipping insurance.

Generally, trucking companies are not set up to handle valuable personal effects — even if you are shipping boxes of merchandise. Consider a mover or a parcel carrier like UPS to carry these.

Movers generally offer one level of shipping insurance for stuff they have packed and a different level for stuff you’ve packed. They may even refuse to give shipping insurance for items not packed by them. Check to see if your homeowner’s or renter’s insurance will cover your goods during a move.

Some quirks about damage claims:

Freight shipping companys will pay no more than the actual market value of the item being shipped — no matter how much shipping insurance you have paid for. They will not compensate you for sentimental value. (A picture painted by your deceased mother would be valued only for the frame and the glass — unless she had been a professional artist with a history of sales.) It might be a good idea to get family heirlooms appraised before shipping them. Old dishes, books, glassware or furniture may have unexpectedly high values.

UPS will no longer give shipping insurance original works of art (anything that could not be exactly replaced) for more than $100. If you need such shipping insurance check before you ship.

Many carriers will give shipping insurance for cash and items that work a lot like cash — like old coins, stocks and bonds. Check before you ship.

Finally, should an item break in such a way as to be a hazard to the carrier (drip oil or contain broken glass) the carrier may return the item to the sender — even if the item has gotten to within a mile of it’s destination.

How to Pursue a Claim

Carriers have been hit by a large number of claims from internet shippers who just don’t pack properly. They have also realized that refusing to pay damage claims is a great way to save money. For these two reasons, they can be extremely hardnosed and unreasonable. (We hear the US Post Office pays damage claims with very little hassle.)

The best way to start the claims process is for the consignee (the receiver) to note damage to the box at the time it is delivered. A UPS driver can make a note of damage on his handheld computer. During the unpacking process, the consignee should hold onto all the packing material. (You will need this material to document that the item was properly packed.) The consignee should call the shipper (the sender) and inform him of the damage. Pursuing the damage claim is the shipper’s responsibility.

It’s a good idea to put labels on a box telling the consignee what to do in case of damage.

The shipper then calls the carrier and informs them of the damage. The carrier will ask for the barcode identifier and the name, address and ‘phone number of the consignee. They will also ask what was in the package and the declared value.

Within a week or two, the carrier should notify the shipper as to whether or not they will pay the claim. Even if you’ve been told the claim will be paid, it’s a good idea to have the consignee hold onto the packing material. Occasionally, the written notice will say the claim has been refused — even after you have been told it will be paid.

When a claim is refused the stated reason will usually be insufficient packing The carrier’s report will usually state how the item was packed and how it should have been packed. If the description of the packing is not correct, you can request a second inspection. Occasionally, it turns out the first inspection was never made. You might request the item be returned to you before the second inspection.

We once had a claim on a damaged TV rejected because item was packed in a single used box. With the goods returned, we could trace the path of a fork lift prong right through TWO boxes and the TV. UPS paid the claim.

Collecting on claims is one area where stubbornness, insistance, rudness — and even screaming insanity seems to make things happen. If all else fails, take your case to small claims court. (Small Claims Courts are rumored to be quite friendly to claims by small shippers).

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