Some Thoughts on Shipping Insurance

[i*m-still-here]

Anyone noticed that insurance for shipments that are really worth insuring is no longer available?

No one will insure certain countries or items, and these shipments are really the only ones that truly demand insurance.

In other words, high risk shipments can no longer be insured.

Medium risk shipments can be insured but at prices which make no sense.

For example, when it costs 25% of item cost (very common) to insure, then insurance is (or should be_ priced out of the market.

Low risk shipments can be insured very easily and the cost can be reasonable.

But............ there is no logical reason to insure these shipments because they so rarely get damaged or lost.

The insurance companies and the PO have this insurance thing down pat.

Don't insure anything if there is a possibility beyond about.05% that the shipper will ever file a claim for the shipment.

These are recent changes for the most part........... and really should make everyone re-think the whole insurance fiasco again.

The bottom line:  Insurance is only available for shipments you don't need if for.  🙂

[recped]

The bottom line:  Insurance is only available for shipments you don't need if for.  

Well of course, that's how insurance companies make money.

My thoughts on insurance......

Insurance is for situations of unusual risk, if you are an eBay seller shipping a consistent volume of items of relatively consistent value it's almost certain that purchasing outside insurance will not be financially rewarding to anyone other than the insurance company.

Over time buying insurance will cost you 1 - 2% of the value of the items you ship, unless you are losing 1 - 2% of your shipments you are throwing money away, if you are losing 1 - 2% of your shipments you are probably doing something wrong.

[i*m-still-here]

Yes, that's right on.

When you pay for insurance you are buying peace of mind.

I think we're all more or less conscious of that, but when we click to pay our emotions/fears take over.

Thing is......... recently both the CPO and TPIPs stopped offering insurance for what they deemed to be high risk shipments.

They've left us out in the open with just those shipments we'd need their services for, and now only sell services there is no need for.

Go Figure!

[cumos55]

Three situations...

(1) Parcel is shipped with no insurance...

Buyer says the parcel was not received,.

Seller refunds and loses... with no insurance

(2) Parcel is shipped with insurance....  Canada Post Small Packet before the middle of January.

Buyer says the parcel was not received

Seller refunds  and files insurance claim.

In both of situation 1 and 2 the buyer is in control.

Buyers says that the parcel was not received,  and there is no way to confirm otherwise.

Seller is protected by insurance in the second situation.

With third party insurance  the buyer must confirm  that the parcel was not received... in a written and signed letter.

Buyer can decide not to send this letter...  Seller loses.

We do have a third option.

(3) Parcel is shipped with insurance and tracking

Buyer says that the parcel was not received..

If tracking shows that the parcel was delivered, buyer can file with Paypal  and Paypal will not refund.... 

This becomes an insurance claim where Canada Post does the investigation,  and determines what happened  and then pays out the insurance claim.

What if parcel was NOTdelivered?  confirmed with tracking showing that the parcel was not delivered....  Buyer gets refund  and Canada Post must confirm non-delivery and pay insurance claim.

With insurance AND tracking the seller is in control of the whole transaction..

Buyer will only get a refund if parcel was not received,  and seller is protected with insurance.

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Shipping with insurance only means that neither Canada Post (before January 2013) nor Third party insurance  want to deal with buyers in problem countries...  The buyer is in control and can scam the postal service  and the provider of insurance.

Insurance alone works if the buyer is honest....  and that is where a buyer can claim non-receipt and get the full payment refunded.

and even with insurance  a seller, and in turn the insurance provider can be scammed....

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Tracking can be costly as an option... However, with insurance and tracking the seller is always in control of the transaction.... 

Tracking also makes it easy to confirm whether the parcel was actually delivered or not.... 

As the years have passed, and as the future arrives, buyers have learned how the system works....  and there are those that play the system to get a refund.

Insurance works if the buyer is honest.

and for the future  tracking as well as insurance will be important.

It become the decision by the seller  with respect to how the parcel will be shipped

--- with or without insurance

--- with insurance and tracking.

The final decision is based on

(1) value of the item being shipping

(2) Delivery option... airmail vs surface mail

(3) Destination--- Canada, US or elsewhere

(4) Availability of insurance

(5) availability of tracking with insurance 

We start with the Value of the item

in relation to destination  and speed of delivery ....and

in relation to cost of insurance .....and

in relation to insurance and tracking

Each seller must look at options,  at the risk involved with each option... and then proceed...

[inuk_the_polar_bear]

I have had no insurance based claims in a few years, multiply that by 1000 sales a year. Why would I pay for something I never use?

Self insure as a cost of business. Insurance is a cost of business. Self insurance costs far less. Why pay more for the exact same thing?

[tobyshitzu]

I'd change those 3 options to,

1. seller ships without insurance and buyer claims not as received, seller loses the money

2. seller buys insurance, whether the buyer claims received or not seller has already guaranteed not only their loss from not received claims but also the insurers profit and administration costs on top

3. seller buys insurance and tracking (when it is optional too), whether item is received or not seller already guaranteed not only their loss from not received claims, the loss to the insurer's profit and admin costs, and the loss to the huge premium to the shipper for "tracking".  Seller also at additional risk of also suffering exactly the same loss as #1 is under paypals seller protection disclaimer  on redirected packages where CP won't pay their insurance on either

[cumos55]

The books that i sell range with a price from $15 to about $200 and sometimes higher, with those same books weighing 250 grams to sometimes over 5.0 kg

It is my choice to ship books priced less than $25, weighing less than 500 grams and less than 2 cm thick using oversize lettermail  or the equivalent.

These items are shipped without insurance and represent about 13 % of everything that i sell each year.

It is either a $15.00 book with $5.00 shipping without insurance or tracking, as opposed to $8.00 for the book with $12.00 shipping as an insured and tracked  parcel as an example..

The difference is $7.00 per parcel  and is close to $700  in higher  income each year ..  This is my self insurance pot of money.

One can ship without insurance... but... How much risk is acceptable?

About 100 items shipped each year without insurance is my level of acceptable risk 

Everything else I ship is controlled by the price or weight of that item....  insurance up to $100 value comes with the Canada Post shipping option.

The Canada Post option  used is dictated by the price of the item being sold... the insured value... ,  and then signature confirmation in order to meet Paypal requirements....

In  situations where the book weighs more than 500 gram or has a value at a level higher than $25, insurance as well as tracking are included  with each option offered by Canada Post...

[pierrelebel]

"Self insure as a cost of business. Insurance is a cost of business. Self insurance costs far less. Why pay more for the exact same thing?"

I totally agree IF your volume is substantial and your loss experience relatively low (less than one percent).

[i*m-still-here]

Yes, all of that is true........

What is sort of amusing in its own way,  is that both the CPO and TPIPs have made changes and stopped offering insurance for just those shipments we really did need it for.

Now, they only sell insurance when it's unnecessary.

[cumos55]

Insurance was removed from those situations where the buyer was in control... 

situations where the buyer can promote a scam...

get both the purchased item and the original payment...

without being held accountable...

Insurance... with tracking... puts the seller and Canada Post in control....

[i*m-still-here]

comos:  I don't think that's true.  Among other things, insurance was removed from countries with POs that are problematic.

BUT..........  your comment begs the question:

If buyers always told the truth, then would there be enough need for insurance to keep the TPIPs in business?

Without buyers like that, shipsurance etc. probably couldn't survive very long.

I recall talking with someone at shipsurance and he was complaining about buyers like that, and all I could think was "without buyers like that you'd be out of a job."

[cumos55]

POs that are problematic.

People from certain countries can also be problematic....and many times the people and the postal service go hand-in-hand....

complaining about buyers like that....

There will always be buyers like that... those willing to take advantage of a situation.....and that is why parcels to some countries will not get Third Party Insurance

I have sold several items to buyers in a specific country... and all of the buyers behaved in a similar manner...unhappy with the process, eBay, and international delivery time... therefore  I must conclude  that many more potential buyers  from that country will behave in a similar manner.

Conclusion... block that country....

Third Party Insurance does the same... block certain countries....  their way of self insuring against loss..