What Is Shipping Insurance, How Much Does It Cost, and Is It Worth It?


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What Is Shipping Insurance, How Much Does It Cost, and Is It Worth It?

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Though major shipping carriers are generally reliable, packages still get lost and damaged, and ecommerce businesses need to be prepared when they do.

A recent survey showed that when ecommerce shipments are damaged or delayed, 53.1% of shoppers expect express shipping on replacement products and 43.9% expect refunded or discounted shipping costs.

This means that many ecommerce businesses will have to cover the cost of damaged or undelivered packages, and then some. Instead of covering losses out of pocket, you can get your packages insured. Read on about the costs and overall value of shipping insurance.

What is shipping insurance?

Shipping insurance is a service that protects shippers against lost, stolen, or damaged packages. If an insured package does not reach its destination, or if it is damaged when it’s delivered, then the shipper is reimbursed the declared value of the items in the package.

How much does shipping insurance cost?

For all carriers, the cost of shipping insurance depends on the value of the shipped items. The more valuable the items, the more expensive the package is to insure. See how much shipping insurance costs for Royal Mail, DPD and Evri here:

Royal Mail Insurance Costs:

Royal Mail typically includes compensation for item values between £20 and £50 within the standard postage costs for items sent via its First or Second Class services. Additional insurance is available up to a value of £2,500 per parcel across its Parcelforce and Special Delivery offers. The exact costs are dependent upon the type of items and level of service selected, more details can be viewed here.

DPD Insurance Costs:

Similar to Royal Mail, DPD typically includes insurance to a value of £520 for each parcel. Again, additional insurance coverage is available for higher value parcels. Details can be found here.

Evri Insurance Costs:

Evri offers a £20 insurance value on most parcels as standard. With additional coverage up to a value of £999 available for a small fee, dependent upon item type. More details can be found here.

Is shipping insurance worth it?

Whether or not shipping insurance is worth the cost depends on your shipping volume and the value of your items. The chance of an average letter or package getting lost or damaged is relatively small. But if you are shipping a high volume of valuable items, then shipping insurance will likely pay for itself.

1. The casual shipper

The average person sending a letter or package generally doesn’t need shipping insurance unless the items are particularly valuable.

2. The business shipper

Business shippers, on the other hand, are constantly shipping items of value. Higher-order volume means that some of your packages will eventually get lost or damaged. And the more valuable your products are, the more you stand to lose. For ecommerce businesses shipping very expensive items, shipping insurance may be a no-brainer.

When in doubt, get shipping insurance

For both casual and business shippers, the rule is the same: If you think you might need shipping insurance, get it. It only costs a few pounds, and if your package is valuable enough that you’re considering insurance, then the small investment is worth the potential upside if something goes wrong.


A recent survey found that 70% of customers are unlikely to shop from an online store after a poor delivery experience. Lost and damaged shipments are unavoidable, but you can still win customers back by quickly reimbursing or replacing the items. Shipping insurance allows you to do so without taking a loss.

Shipping Insurance FAQs

Orders lost and damaged in transit with the carrier can have a major impact on your business. Check out some of the most frequently asked questions about shipping insurance.

How much does it cost to ship with insurance?

It depends on the carrier and the value of the shipped items. The costs of shipping insurance from each of the major carriers and postal services are listed above. There are third-party shipping insurers as well that tend to be even cheaper than the major carriers.

How does shipping insurance work?

To get reimbursed when a package is reported missing or damaged, file a claim with your carrier or insurer. You will need to submit documentation proving the value of the items.

The carrier may have to search for a product if it was lost or stolen, which can take up to 10 days. Otherwise, claims processing typically only takes a few days.

Do 3PLs handle shipping insurance?

Some third-party logistics (3PL) providers do while others don’t. And some 3PLs will provide insurance but require the seller to handle claims processing on their own. Here at ShipBob, in every verified case of loss or damage, we can file claims with the carriers on the customer’s behalf and help reclaim the retail merchandise value.

For high value orders, ShipBob highly recommends adding additional insurance to make sure they can claim the full amount if something goes wrong in transit. You can also purchase extras such as signature on delivery for extra peace of mind.

Need help with fulfilment? See if ShipBob is a good fit for your business. Speak to a fulfilment expert and request a pricing quote from ShipBob.

Written By:

Kristina is the Director of Marketing Communications at ShipBob, where she writes various articles, case studies, and other resources to help ecommerce brands grow their business.

Read all posts written by Kristina Lopienski