When do You Need Postage Insurance?

what is postage insurance

When do you need 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.

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.

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

When do 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 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.

How to File a Claim for Postage Insurance

If you encounter the unfortunate event of a lost, damaged, or stolen parcel, knowing how to file a claim for postage insurance is crucial. Here’s a simplified guide to navigate through this process:

  • Gather Required Documentation: Before you start the claim process, ensure you have all necessary documentation, including proof of insurance purchase, evidence of the item’s value (receipts or invoices), and photos of any damage, if applicable.
  • File the Claim Promptly: Timing is key. Most carriers have a specific window within which you must file a claim after the incident. For USPS, the timeframe varies based on the service used, so check their guidelines.
  • Online or In-Person Submission: Depending on the carrier, claims can often be filed online for convenience. However, you may also have the option to submit your claim in person at a local branch.
  • Follow Up: After submitting your claim, keep track of its status. If you don’t hear back within the expected timeframe, don’t hesitate to follow up with the carrier for updates.

By understanding the claim process, you can ensure a smoother resolution to any issues that arise during shipping.

Deciding When Postage Insurance Is Necessary

what is postage insurance

While postage insurance offers numerous benefits, it might not be necessary for every shipment. Consider these factors to determine when insuring your package is a wise decision:

  • Value of the Shipment: High-value items are prime candidates for postage insurance. Assess the cost of the item versus the cost of insurance to make an informed decision.
  • Fragility: If you’re shipping items that are easily damaged, insurance can provide peace of mind and financial protection.
  • Destination Risks: Consider the destination’s reliability. Areas prone to theft or delivery issues might warrant the added security of insurance.
  • Customer Expectations: For businesses, ensuring customer satisfaction is paramount. Insuring products can safeguard against negative experiences due to shipping mishaps.

By weighing these factors, you can make an educated choice on whether postage insurance is necessary for your shipments.

International Shipping Insurance Considerations

Shipping internationally introduces additional complexities, making insurance even more critical. Here’s what to keep in mind for international shipments:

  • Understand International Coverage Limits: Insurance coverage limits may vary by destination. Ensure your coverage meets the value of your shipment.
  • Familiarize Yourself with Destination Country’s Regulations: Some countries have specific rules regarding insured parcels. Research these regulations to avoid any surprises.
  • Consider Additional Insurance for High-Value Shipments: For extremely valuable international shipments, looking into third-party insurance providers that offer comprehensive coverage might be beneficial.

By considering these aspects, you can better navigate the intricacies of international shipping insurance, ensuring your items are protected across borders.


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:

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.