Understand the Differences and Knowing Your Options
Written By: Narek Hakobyan
Are you confused about the differences between declared value and shipping insurance? Don't worry; you aren't the only one. These two are often mistaken for each other but are different. Understanding the differences between declared value and shipping insurance is important, as they can significantly impact you or your business. This blog post will explain the differences between declared value and shipping insurance, helping you understand your options.
Declared Value
When you ship a package, you can declare its value to the carrier. This is what we call declared value, and it directly affects how much the carrier is responsible for if something happens during transit (i.e., loss, damage, or theft). Declared value is based on how much the item costs to you, the shipper, and is often consistent with the customs value. Declared value is essential because it can help you save money on shipping insurance and avoid overpaying for the carrier's liability. If you want to know more about declared value and how it works, you can visit our page here.
Shipping Insurance
What is shipping insurance? Well, it is a type of coverage that protects both the sender and receiver of a shipment from losses due to damage, loss, or theft during transportation. Shipping insurance can be purchased from most couriers and 3rd party providers. The main benefit of shipping insurance is that it can cover your shipment's total value or a percentage of it, depending on the policy and the provider.
Here is some helpful information to keep in mind:
- The cost of shipping insurance varies depending on the value of your shipment, the destination, the carrier and the provider. Shipping insurance rates are usually around $0.50 to $1 for every $100 declared.
- Shipping insurance doesn't cover all items. Some items commonly excluded are perishables, artwork, cash, hazardous materials, luggage and liquids.
- In order to claim shipping insurance, the sender or receiver has to provide proof of the value, usually an invoice or receipt. Proof of damage, loss, or theft must also be proven with photos or tracking information. Most claims need to be filed within 15-90 days after shipment.
Declared Value vs. Shipping Insurance
Declared value and shipping insurance are both important components when shipping goods, but they serve different purposes. Declared value determines the carrier’s liability in case of damage or loss, while insurance provides coverage for the actual value of the goods. The following table summarizes the differences between declared value and shipping insurance:
Declared Value | Shipping Insurance |
| Value declared by shipper for each package. | Shipping insurance provides full coverage for the actual value of the shipment. |
| Limits carrier liability to declared value. Many carriers restrict liability to $100 per package, with a maximum of $50,000 (Note: May not apply to all carriers). | Additional coverage beyond carrier liability. |
| May influence shipping cost. | Additional cost based on insured value. |
| Claims made with carrier per their terms. | Separate claim with insurance provider. |
| For basic coverage; often required by carriers, especially for high-value items. | Recommended for valuable or fragile items to ensure comprehensive protection beyond carrier limits. |
Conclusion
In summary, declared value and shipping insurance serve different purposes. Declared value is handy for one-time shipments or when dealing with lower-value parcels. If your package is worth only $100 or less, the declared value should suffice in case of loss or damage. However, if you have frequent shipments, ship higher-value items, or need international shipping, having shipping insurance is a good idea.
Without proper coverage, losing packages can significantly impact your financial operations. So, don't overlook the importance of shipping insurance—it's a key component for safeguarding your business.
