Is shipping insurance worth it?
July 26, 2005 2:02 PM   Subscribe

Does anyone have any personal experience with buying and then having to make a claim against the insurance you can get when shipping through the major carriers, i.e. USPS, UPS. FedEx, DHL? Are any of them better than the others when it comes to making a successful claim? Or is buying it just like pissing money away because they make it so difficult to get paid if something does happen? Any tips, tricks from the community?
posted by crosten to Work & Money (11 answers total)
I've only had to deal with UPS, but it was pretty straightforward. You will need to hang on to any paperwork and it'll take them a while to issue the credit. In my case it was a simple issue: I had sold something breakable, had the UPS Store pack it, insured it, and it broke in transit. Things making my claim easier were that it was opened in front of the driver, I had a receipt showing how much it was worth, and that I had them pack it.
posted by cali at 2:28 PM on July 26, 2005

At a previous job, we had an insurance claim with Airborne Express (DHL). The cargo was a big, heavy, rack-mount server, well-packed in crumpled paper and peanuts in a good-sized box. It arrived with the box all smashed up and the server's case badly bent.

The insurance guys sent someone around to look at it, but they never paid a cent, since we hadn't shipped in the manufacturer's original packaging.
posted by pocams at 2:29 PM on July 26, 2005

Had to do it once with FedEx. They had lost a box of mine (pouch fell off) and found it, and reshipped and it had been beat all to hell (it was a computer; the case ended up getting completely destroyed). I filed a claim and got back the item and the check within a month's time. As it happens I was the seller - the buyer reported the item as being practically destroyed and returned it to me, I think, and I refunded and filed a claim. Important to keep paperwork handy if you do need to file a claim; also, FedEx will only refund the amount the value they feel it's worth (which, in my case, was the amount the item sold for - it sold through eBay so that was pretty cut and dry) if you buy more insurance than the item is worth.
posted by mrg at 2:29 PM on July 26, 2005

When I find I have to rely on insurance, I never pack & ship myself. I take the item to a shipping store (like the UPS Store) and have them package and ship it... that way the burden is placed on the store. I've heard too many stories about FedEx, UPS, and their ilk not paying out for various reasons. would be the best place to get a feel for this issue.
posted by rolypolyman at 2:43 PM on July 26, 2005

It's worth it if you need to collect but make sure you don't pay to insure for more than replacement price. Just because they take your money for $1000 worth of insurance doesn't mean they'll just hand you that check - you'll have to produce the original receipt at or the replacement receipt.

How difficult they are seems to depend on the phase of the moon. I've had USPS and UPS pay out without an issue and I've also seen them be amazing PITAs. Expect to be challenged that you did indeed pack it safely. UPS's party line of late for electronics is they want it in the original box INSIDE another box. *shrug*
posted by phearlez at 3:21 PM on July 26, 2005

I used to work at Mail Boxes Etc, before it became the UPS Store (and I have no idea how things work between the stores and UPS now). We acted as the shipper's agent, and if anything went wrong, we handled claims-filing, etc. So I've been through this many times.

The post office, you will be completely unsurprised to learn, was (and probably still is) the most difficult to deal with. The other guys were roughly comparable--the difference between different representatives within one organization will be greater than the average difference between organizations.

The routine is generally this: you need some way of substantiating the value. If the item was delicate and broken in transit, the carrier will send an inspector, and their standards for adequate packaging are not unreasonable, but a lot more stringent than the average guy might imagine. (We had one incident where a customer brought in, already packed, a couple boxes of Spode china valued at about $5000. I grilled him, intensively, on the quality of his packing job. He swore up and down "you'd need to drop an atomic bomb on this to break it." I took him at his word and shipped it, noting "customer's own packing" on the shipping order. Sure enough, there was about $2,500 worth of damage, and it turns out he had jammed all the plates into the boxes with one layer of newsprint between each, and a little more crumpled in the corners. UPS did not honor his claim. He complained that I didn't warn him that his packing might not suffice.) They may want to ship the box back to the sender before doing an inspection--I've never understood this, and you should discourage it. If the inspector agrees "yes, our fault," you send the carrier an invoice along with some way of substantiating the item's value.

The recipient should hang onto all the original packaging, and keep the shipment in as near to the condition he received it in as possible. If you throw out the packing peanuts before the inspector arrives, he's going to say "inadequate packaging."

If the item is lost, they will try to find it in their system, try to find if it was mis-delivered (it happens), and if none of that works, it's the same thing: send invoice, substantiate value. They may go to interview the intended recipient to make sure you're not scamming them.

You will need to be persistent, and it will be a slow process.
posted by adamrice at 3:34 PM on July 26, 2005

I had a claim against FedEx once. A rackmount server was shipped to London from California, in the original box. Upon arrival the server was bent down the middle. To do this you basically have to crush the entire box and even then it would have to not be on a flat surface to get it to bend this way. The server was also steel, even if it wasn't in any box it would be a challenge to bend it.

FedEx did try to deny the claim, saying it was improperly packed. They eventually accepted the claim when it was pointed out that the damage wasn't from shock, like most other damage, but from wholesale crushing, which is almost always their problem.

The lesson I got from this is that your package needs to protect its contents from vibration and the shock of being dropped about 3 feet. FedEx'es only responsability is really to not crush it, drop out the door of a 747 (in flight or on the tarmac), throw it from a moving vehicle, set it on fire, get it wet or, of course, lose it.

I also had something broken of mine by USPS, a digital camera. I really hadn't packed it very well (crumpled newspaper) and the LCD was cracked on arrival. I just took it into the post office, they looked at the box and told me I should have packed it better, but gave me a form and a month later I had a check. :)

I don't think the post office really cares as much as the other carriers about paying you since they don't have shareholders, the employees have very good job security and aren't afraid of getting fired for accepting a claim.

I've had the best domestic experience with USPS, who has never lost anything of mine and is generally just a fast or faster than ground FedEx and UPS. But their tracking is a joke.
posted by darkness at 6:11 PM on July 26, 2005

The insurance provided by the courier or the post office is very limited. If you get paid the amount you claim, it's probably because someone decided it's a small enough claim that it's not worth quibbling over it -- not because you are actually for that amount.

For one thing they generally say that you are covered for the lesser of: The price you paid for the item, the current depreciated value, the price the recipient of the parcel paid you for the item, etc.

Also, the packaging requirements are pretty stiff -- e.g. there must be a two-inch "crush zone" (that is, the item your are shipping must be more than two inches from the walls of the box). Basically, if the item is damaged without the box being severely crushed or deeply punctured, then the problem was insufficient packaging.

There are other options, though. You can decline the coverage from the carrier and use a third party like U-PIC or DSI. They are much more customer-friendly, have fewer exclusions, have clearer policies, and are very flexible.

I have an account with DSI. I can insure parcels for as little as $0.13 per $100 of coverage. If I buy something for $5 and sell it on eBay for $200, I can insure it for $200 (the post office and couriers will let me pay for $200 insurance but only pay out $5), and a printout of the eBay auction is sufficient proof of value. If I need coverage that's a little different than the standard policy, they can work something out for me. I haven't had to make a claim yet but I'm quite happy with my experience so far
posted by winston at 6:39 PM on July 26, 2005

Was sending something (a borked PCMCIA modem) back to the manufacturer for repairs under warranty through USPS. Bought insurance for it. The company never got my parcel (up to about a week after they should have gotten it), spoke with the post office, got my cheque in about a week for the (declared) insured amount.
posted by PurplePorpoise at 8:34 PM on July 26, 2005

I shipped a package COD insured by UPS. UPS gave it to the wrong person without collecting even a signature, never mind the COD. UPS refused to re-imburse me for 3 months over the course of at least 5 phone calls (all logged by me) suggesting that their new agreement (which was not the same as the one I had a copy of, SIGNED BY THEIR OWN WORKER) permits them to ship a COD package to the wrong person without compensation. Seriously. Read it. It's on their site now. Anyways, on the third month of no satisfaction I sued them two days before Christmas and within 72 working hours I had their lawyer practically begging me to take a settlement. Since I'm not one to profit from another's mistake, I took it.

UPS cancelled my account with them without asking me. Good riddance to bad rubbish, I say.
posted by shepd at 1:26 AM on July 27, 2005

FedEx doesn't do "insurance", what they have is declared value, which is basically a limited liability. On items like jewelry, antiques, anything inherently fragile or irreplacable, this maxes out at about $500 with Express and $100 with Ground. You end up paying extra for a higher declared value, so people think they're getting insurance, but surprise, they're still only going to give you what you can prove it was worth. If you want to insure they suggest using an outside insurance company.

You need the claim reported asap (there's a limit on how many days past the shipping date you can file), and the shipper needs to be the one to file it. They'll ask for the claim form, a damage inspection (if it's over $100 and they don't already have record of the damage on file), and you'll have to send in proof of value. As the recipient you can file the claim if you can get the shipper to fax in authorization for it to be settled with you.

I think more often than not they'll blame the packaging or say there's some problem in your documentation, but like most things if you're persistent you can get your claim reopened and looked at more.
posted by jheiz at 7:31 AM on July 27, 2005

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