What Is Postage Insurance and When Is It Necessary?

what is postage insurance

What is postage insurance? Whether your shipping vintage table lighters from a recent eBay sale or a technology component to an important client across the country, postage insurance may be something you  want to consider. Because without it, you might end up paying a heavy price.

What is Postage Insurance?

what is postage insurance

Postage insurance is a service provided by postal services and courier companies that offers compensation to senders if their parcels are lost, damaged, or stolen while in the custody of the postal service or courier company.

Drive Traffic to Your Website

Discover the Zoho Ecosystem

Sell Your Business


It acts as a safeguard for both senders and recipients, ensuring that the value of shipped items is protected in case of unforeseen circumstances. This insurance is especially crucial for valuable items, fragile goods, or business shipments where the financial loss from damage or non-delivery could be significant.


For many businesses and individual shippers, it’s not just about the monetary value but also about the peace of mind that comes with knowing that their shipments are covered in the event of mishaps.

Small Business Deals

Before opting for postage insurance, it’s important to understand its terms, coverage limits, and any exclusions that might apply.

Why You Need Postage Insurance

Imagine this scenario. You ship a set of books from a recent eCommerce sale to customers a few states away. Despite carefully packing your items for shipment, the worst happens. The shipment that reaches your customer is damaged due to bad weather conditions and you get an angry email and maybe a request for a refund.

what is postage insurance

What happens next is dependent on whether or not you had postage insurance in place. Insurance will cover losses that occurred while while in transit — to a point.

Without postage insurance, of course, there may be no way to recover the loss — and the money will come out of your business.

Here’s what you need to know about the postage insurance supplied by the Unites States Postal Service. Other shipping insurance offered by alternative carriers like UPS and Federal Express may differ.

More Reasons Why You Need Postage Insurance

what is postage insurance

  • Protection Against Damage or Loss: Despite the care you put into packing, accidents happen. Insurance provides a safety net when shipments are damaged, ensuring you or your business won’t bear the financial brunt.
  • Peace of Mind: Knowing your shipments are insured offers peace of mind, especially when sending valuable or fragile items. You can ship with confidence, knowing there’s a backup plan in place.
  • Financial Security: Without insurance, a lost or damaged item can result in financial losses. With insurance, you’re protected from unexpected out-of-pocket expenses.
  • Enhances Customer Trust: Offering insured shipments can boost your business’s credibility. Customers feel more secure ordering from companies that use insured shipping methods.
  • Coverage for High-Value Items: Some items might be irreplaceable, but with insurance, at least their financial value can be compensated. It’s especially important for high-value shipments.
  • Defense Against Scams: Some customers might claim non-receipt of items to scam businesses. Standard postage insurance typically comes with delivery confirmation, ensuring you have proof against such claims.
  • Flexibility with Different Carriers: While the USPS offers its insurance, other carriers like UPS and Federal Express have their own versions. This gives businesses options to choose the best fit for their needs.


USPS Insurance Options

USPS, provides Standard Shipping Insurance to protect against loss, damage or missing contents.

The insurance covers only the actual value of mailed contents. And you may purchase up to $5,000 indemnity coverage in person at a Post Office or online.

You do have the option of choosing additional insurance of up to a maximum coverage of $5,000. You can purchase this for merchandise valued at more than $100 sent by Priority Mail Express.

And here’s another benefit worth considering. Imagine receiving an order on  your website. You ship it out in timely fashion only to get negative feedback from your customer claiming lack of delivery — and a demand for a refund.

Fortunately, standard postage insurance also comes with delivery confirmation, meaning less chance of getting scammed by such claims.

But before deciding on insurance for your next package, another idea is worth considering.

There are types of mail not eligible for insurance. USPS states that parcels containing material offered for sale, addressed to prospective purchasers who haven’t ordered or authorized their sending are ineligible.

USPS also says “non-mailable” material and extremely fragile articles do not qualify. In addition, articles not adequately prepared to withstand normal handling in the mail are not eligible.

USPS Standard Shipping Insurance FeaturesDetails
Coverage TypeProtection against loss, damage, or missing contents
Value CoverageCovers the actual value of mailed contents
Maximum Indemnity CoverageUp to $5,000, available at Post Office or online
Additional Insurance for Priority MailUp to $5,000 for merchandise valued at more than $100
Delivery ConfirmationIncluded with standard postage insurance
Ineligible Mail TypesParcels with unsolicited material; "Non-mailable" materials; Fragile articles; Unprepared articles

Ensure you comply with these rules and are eligible for shipping insurance when appropriate to make your business run more smoothly.

Priority Mail Photo via Shutterstock

More in: 4 Comments ▼

Shubhomita Bose Shubhomita Bose is a Staff Writer for Small Business Trends. She covers key studies and surveys about the small business market, along with general small business news. She draws on 8 years of experience in copywriting, marketing and communications, having worked extensively on creating content for small and medium sized enterprises.

4 Reactions
  1. Pack it extra well so it doesn’t get damaged. That’s easier than trying to get them to pay out a claim.

  2. At first, insurance may seem unnecessary. But it gives you the peace of mind that it will be covered in case something goes wrong. This is true especially if you operate a business on books or you have to ship important documents.

  3. If you’ve never tried to get them to pay out a claim then you will discover that ‘peace of mind’ was as misplaced as it can be. Their indifference to our loss & lack of accountability is truly remarkable. Lets say a customer says the box arrived empty even though you fully insurance & packed it. At this point the post office will refuse to honor that insurance & you’ve lost both the extra money you paid, postage & your item. Clearly this author has never looked into their continuous failures to pay out claims. Do not trust them.

  4. A box with glassware shipped wrapped in bubble wrap and packed in foam arrived broken and the claim was denied with the catch phrase not adequately packed to withstand normal handling. Their phrase to fragile to withstand normal handling is another good out for them. Keep this in mind when you mail something you value.

Leave a Reply

Your email address will not be published. Required fields are marked *