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Is Shipping Insurance Necessary? A Guide

Shipping insurance is an essential part of any company’s logistics strategy. As an ecommerce business, you will know the importance of getting your products to your customers in perfect condition. It provides protection and peace of mind when it comes to the transportation of goods and products. Whether you’re a small business shipping locally or a large company with international operations, having insurance coverage can save you from potential financial losses and headaches.

What is shipping insurance?

Shipping insurance is a valuable add-on service provided by couriers for a small extra fee, that offers peace of mind to both sellers and buyers. When you ship a product, there’s always a risk of loss, theft or damage during transit. Shipping insurance provides coverage so you can be reimbursed for potential losses, ensuring that you are not left out of pocket if something goes wrong. It’s like having a safety net that allows you to focus on running your ecommerce business without worrying about the unpredictable nature of shipping.

Why is shipping insurance important?


Shipping insurance is an important consideration for ecommerce businesses. For a small additional fee, you can ensure that your products are protected and that you will be compensated for any damages or losses that may occur. This not only protects your bottom line and helps to build trust with your customers, but has become an essential part of running a successful ecommerce business.

Advantages of shipping insurance:


  • Financial protection – in case of loss or damage during transit, you will be compensated 100% of the value of your parcel.
  • Easier claims processing – ensuring a smooth and hassle-free experience in case something goes wrong.
  • Peace of mind – knowing that high-value or fragile items are covered in case of any unforeseen circumstances.

This means that you can confidently offer your customers reliable and secure delivery options, knowing that their purchases are protected. So, whether you’re a small Etsy seller or a large-scale online retailer, shipping insurance is your best friend when it comes to safeguarding your business and providing excellent customer service.

Types of Shipping Insurance

There are a few different types of shipping insurance available, depending on your business needs.

  • Carrier Liability Insurance: this type of insurance is available as an optional add-on from parcel couriers such as Royal Mail, DPD and DHL. Some carriers limit the types of items covered and have restrictive claims windows.
  • Third-Party Insurance: provided by independent companies, this a more comprehensive type of insurance tailored to your specific shipping needs.
  • All-Risk Insurance: This type of coverage guarantees full protection against any possible risks involved in the shipping of goods.
  • Named Perils Insurance: this type of insurance only covers specific risks that are defined in the policy.

How does shipping insurance work?

When you purchase shipping insurance, you are essentially paying a small fee to insure your package against loss or damage during transit. If the package is lost, damaged, or stolen, you can file a claim with the shipping carrier and they will reimburse you for the value of the item. This ensures that you are not financially responsible for any mishaps that occur during shipping.

It’s important to note that not all carriers offer shipping insurance, so be sure to check with your chosen carrier to see if it’s available. Additionally, it’s always a good idea to properly package your items to minimize the risk of damage during transit.

How much is shipping insurance?

The costs involved will depend entirely on the value of the items being shipped. The higher the value of the parcel, the more it will cost to insure it. Factors such as delivery type, distance and parcel weight will also contribute to the total shipping costs. Be sure to check what e-commerce delivery options are available with your chosen courier.

Here is a quick guide to shipping insurance costs by popular couriers:

Royal Mail

Royal Mail includes insurance in their shipping costs. The total costs will depend on your chosen shipping service, the weight of your parcel and the value of the contents.

Value of Contents Insurance Costs
Up to £750 From £6.85*
Up to £1,000 From £7.85*
Up to £2,500 From £9.85*

* Source: based on Royal Mail Special Delivery Guaranteed by 1PM, 2023.


DPD includes standard parcel insurance with their shipping prices for goods up to £50. They offer additional coverage for a small fee for goods valued up to £5,000.

Value of Contents Insurance Costs
Up to £50 Included as standard cover
Up to £5,000 Calculate estimate here

Source: DPD Help Centre


Evri includes shipping insurance for many types of items valued up to £20 free of charge. You can choose option cover for high value items valued up to £999.

Value of Contents Insurance Costs
Up to £20 Included as standard cover
Up to £999

Source: Evri FAQs

Parcel Force

Parcel Force insures items valued up to £25 -£200 as standard. The included cover will depend on the type of delivery service you have chosen. You can insure items up to a maximum value of £2,500 for an additional fee.

Value of Contents Insurance Costs
Between £25-£200 Included as standard cover, depending on delivery service
Up to £2,500 80p plus VAT per £100 of cover

Source: Parcel Force Help & Advice


UPS includes insurance for items up to £60 at no extra cost. You can opt for additional coverage to a maximum value of £1,000.

Value of Contents Insurance Costs
Up to £60 Included as basic coverage
Up to £1,000 £6

Source: UPS Parcel Delivery Prices


You can expect to pay £12 for DHL shipping insurance on non-document items valued up to £800. Insurance for shipments over the value of £800 is charged at a rate of 1.5% the value of the items.

Value of Contents Insurance Costs
Up to £800 £12
£800+ 1.5% of the items value

Source: DHL Insurance & Claims

What does shipping insurance cover?

Shipping insurance can cover anything from ecommerce goods to important documents. It’s always a good idea to review the specific terms and conditions of your chosen courier to ensure you have coverage for your specific business needs. You will typically be covered for:

  • Loss or misplacement of parcels
  • Theft of goods
  • Damage of items during transit
  • Shipping delays

It is also important to note that parcel insurance typically does not cover:

  • Cosmetic damage to the packaging or envelope
  • Damage caused by the item itself such as leaks
  • Loss or damage as a result of poor packaging

Is shipping insurance worth it?

Shipping insurance is a crucial and valuable investment for ecommerce businesses, particularly if you are sending high value items. While it may seem like an additional expense, the benefits far outweigh the cost.

Shipping can be unpredictable, and accidents or damage during transit are not uncommon. With shipping insurance, you can protect your products and your bottom line.

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