When serving customers, companies have many considerations, including shipping and its impact on the customer experience. And when evaluating shipping options, there are a number of variables, including cost, value, and dependability that must be taken into account. But companies also must plan for what happens when something goes wrong.
A customer calls and complains that a package didn’t arrive on time, or equally as serious, the package arrives broken or in poor condition. The first priority is finding a resolution for that customer, but what amount, if any, can you recover for the loss?
FedEx is a popular carrier choice, shipping 14 million packages to 220 countries and territories daily. The company offers insurance to handle these types of situations, but how much does it cover, and what is the cost? Understanding the pros and cons of FedEx shipping insurance can help you decide what role, if any, this option should play in your business operations.
What is FedEx Shipping Insurance?
FedEx offers insurance to help offset the cost if a package is lost, stolen, or damaged. The first $100 of insurance doesn’t cost anything, but if the value of the package is higher, you can purchase additional insurance to cover potential losses.
There is a small risk of package loss during transit, but damage is more common. One study found that up to 11 percent of packages are damaged during transit. Damage results by carrier vary, but the study found the following percentage of damaged packages by carrier:
- UPS: 11 percent
- USPS: 10 percent
- FedEx:7 percent
FedEx had the smallest percentage of damage in this study, but in these events, shipping insurance helps offset the cost. Purchasing the right amount of insurance is key and involves stating a “declared value.”
Understanding FedEx Declared Value
Purchasing insurance requires you to tell the carrier the value of the shipped items. Upfront proof or receipts are not required at this stage; however, if you make a claim, these will be required to confirm the value of the package.
The first $100 of insurance is free for most services; however, you can purchase insurance for more than this value (more on this shortly).
Adding more insurance to a package can be accomplished online or in person.
Also note that with FedEx insurance, the carrier will not automatically replace the item if it’s broken and can be repaired. Additionally, FedEx has a maximum declared value, which varies based on the service you select.
The cost of insurance varies based on the type of service that you select and the items you plan to ship. Here are a few samples of what to expect:
FedEx SameDay & SameDay City:Maximum declared value is $2,000, and the additional cost for declared value is $3 for shipments up to $300. One dollar per $100 is charged for declared values over $300.
U.S. Express package service, U.S. Ground service, and International Ground services.The additional cost is $3 for shipments valued up to $300. After this amount, it’s $1 per $100 of declared value over $300.
Direct Signature Confirmation service is available at no cost if you state the value is in excess of $500. As a result, FedEx will require a signature from the package recipient when delivering the package. If nobody is available to receive the package, the carrier will attempt delivery again. Shippers sending multiple items should also carefully consider whether shipping multiple items together makes sense. Insurance covers the entire package, regardless of the value of each item shipped.
For example, let’s say that you plan to use FedEx SameDay City, which has a maximum declared value of $2,000. You are shipping two items, each worth $1,500. In this case, it might make sense to ship the items separately to ensure you achieve full coverage.
Understanding Insurance Limitations
When using any carrier, including FedEx, it’s a good idea to verify which items are not covered or have limitations on coverage. For example, the Declared Value and Limits of Liability sections of the FedEx Service Guide explain that items of extraordinary value and those items with a value that is difficult to ascertain may not be declared. According to the FedEx site, limitations include the following:
For Shipments containing the following items of extraordinary value the Declared Value for Carriage is also limited and depends on the contents and destination of the Shipment:
- Artwork, including any work created or developed by the application of skill, taste or creative talent for sale, display or collection. This includes without limitation, items such as paintings, drawings, vases, tapestries, limited-edition prints, fine art, statues, sculptures, collector’s items, customized or personalized musical instruments or similar items.
- Antiques or collectable items, or any commodity that exhibits the style or fashion of a past era and whose history, age or rarity contributes to its value. These items include but are not limited to, furniture, tableware, porcelains, ceramics and glassware. Collectable items may be contemporaneous or relating to a past era.
- Film, photographic images, including photographic negatives, photographic chromes and photographic slides.
- Any commodity that by its inherent nature is particularly susceptible to damage, or the market value of which is particularly variable or difficult to ascertain.
- Jewelry, including but not limited to, costume jewelry, watches and their parts, mount gems or stones (precious or semiprecious, cut or uncut), industrial diamonds and jewelry made of precious metal.
- Precious metals, including but not limited to, gold and silver, silver bullion or dust, precipitates or platinum (except as an integral part of electronic machinery).
- Furs, including, but not limited to, fur clothing, fur-trimmed clothing and fur pelts.
FedEx might not exclude insurance on the above items outright, but may limit the amount you can declare. For example, FedEx permits a maximum declared value up to $1,000 for the following items:
- Precious metals
- Plasma screens
- Stocks, bonds, and cash equivalents
- Collectibles, such as coins or stamps
- Some musical instruments
- Models, such as dollhouses
If you state a value that exceeds the amount allowed, you simply won’t be able to recover more than what is set forth in the FedEx rules and regulations.
How to Insure Your FedEx Package
Taking advantage of FedEx insurance is easy. When you drop off the package to be packed and shipped, simply fill out the value section of the shipping form. If the package includes items worth less than $100, don’t worry about purchasing additional insurance; coverage is already provided.
Additionally, you can pack your own item and have it picked up at your location, which is ideal for businesses shipping large numbers of packages. Ensure that you follow FedEx packing requirements, which is important if you file a damage claim. Packages that exceed $100 in value require a declared value. And all you need to do is state the value, knowing that you’ll need to have documentation if a claim is required.
Packing Details and Considerations
FedEx has guidelines about packing items, and if you file an insurance claim, these guidelines become important. In the case of damage, FedEx wants to make sure that the package was packed properly so they can determine who was at fault for the damage. If the package was not packed according to their guidelines, they may deny the claim. The carrier makes a few suggestions for packaging, including the following:
- You may use your own packaging if the boxes are sturdy and undamaged with all flaps intact.
- Chipboard boxes, including gift or shoe boxes, must be packed into a corrugated outer box.
- If items are heavy, use double-wall boxes.
- Place small packages inside a larger outer box.
- All fragile items should be double-boxed with 3 inches of cushioning in and around the smaller box.
- Wrap items individually with cushioning material and center them in boxes away from other items and not near the sides, corners, top or bottom of the box.
- Bottles that contain liquids should be upright. The inner packaging should be able to contain any potential leaks.
Full guidelines can be reviewed here, which include guidelines for unique items, such as those with insurance limitations, including artwork, photos, and musical instruments.
Understanding the FedEx Claims Process
Purchasing insurance is a safeguard that most hope they won’t need. But if a customer’s package goes missing or arrives with damage, you’ll need to cash in on that insurance you purchased. But how? FedEx provides a few different methods for filing a claim, including online or by email or fax to the FedEx claims department. Filing a claim online allows you to get updates on your claim easily via email. Fax or mail must be used when filing an international claim.
After submitting your claim, contact FedEx customer service to get a case number so you can reference it if you need to check on the claim in the future. If you’re making a claim for damage, ensure that all packing materials, including the box and packing contents, are kept handy as FedEx might ask to inspect the items.
Additionally, keep your eye on the calendar. FedEx Express requires that damaged or lost package claims be made within 60 days after the shipment is sent. For international packages, claims must be made within 21 days. FedEx Ground claims have a nine-month window from the delivery date; however, if the item is lost or missing, it must be reportedwithin 60 days. If you make the claim outside the designated time frame, FedEx won’t investigate the claim.
After you make a claim, resolution is fairly quick and usually completed within a week. Once a claim is approved, reimbursement for the declared value is sent.
Shipping with Greater Confidence
Most companies ship a large number of packages each year, and the majority of those packages will arrive on time and without damage. But in a small number of cases, something goes wrong during the shipping process — a package gets damaged or appears to simply vanish, leaving the customer unhappy and looking for resolution.
Taking care of the customer is the first goal, but afterward, a company needs to recover their financial loss. FedEx insurance is one tool that can help minimize these losses. Understanding what this type of insurance coverage offers and developing internal policies for handling these situations will create smoother experiences and minimize potential loss.
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