Why every e-commerce business should consider shipping insurance

In the bustling world of e-commerce, where packages crisscross the globe to reach customers, a hidden realm of uncertainty often lurks in the shadows. It’s a realm where the unexpected can happen, parcels may encounter unforeseen perils, and where the security of your business lies in the balance. This is where the concept of shipping insurance emerges as the unsung hero of modern online retail.

This article examines the importance of shipping insurance for any e-commerce business, exploring its benefits and how it stands as a protective shield against common shipping errors.

A Look into Shipping Insurance

Picture this: You’ve just sealed the deal with one of your most valuable customers, and your product is coming to them. Your hard work has paid off, and customer satisfaction is paramount. But a few days later, the unthinkable happens – you receive a notification that the package has been damaged in transit

The sinking feeling of knowing your customer will be disappointed is terrible enough, but there’s another weight on your shoulders: the looming financial loss. Consider reimbursing the entire cost to ensure your customer remains happy, but that’s a significant hit to your bottom line. 

Now, imagine a different scenario. One where you have shipping insurance. In this case, you wouldn’t have to lose sleep over it.

Shipping insurance acts as a protective safety net for e-commerce businesses. It’s the ultimate reassurance that your valuable shipments are safeguarded against the uncertainties of the shipping process. Shipping insurance has your back, whether it’s a missing package, damaged goods, theft, or even unexpected natural disasters.

The Importance of Shipping Insurance

The National Cargo Security Council (NCSC) estimates that the global financial impact of cargo loss exceeds $50 billion annually. Without shipping insurance, the financial burden of this loss falls squarely on the shoulders of the business. [1]

E-commerce businesses should insure their packages for several crucial reasons:

1. Insurance stands to protect your shipments against common errors such as loss and damage

One of the primary benefits of such insurance is the protection it offers against unexpected losses. In the USA, more than 1.7 million packages disappear daily, contributing to $25 million in lost goods and services. This figure can translate into substantial business financial losses, mainly if high-value goods are involved. However, with a robust shipping insurance policy, these losses can be covered, ensuring businesses don’t bear the financial brunt of shipping mishaps. [2]

Shipping insurance does more than protect against financial losses; it enhances an e-commerce business’s reputation. Customers are more likely to shop with a retailer that offers shipping insurance. This is because customers feel more confident and trust companies that take steps to ensure the safe delivery of their products. Implementing shipping insurance can, therefore, result in increased customer loyalty and repeat purchases.

2. It is easy to get yet an invaluable asset for your business

One of the primary reasons why it is considered invaluable is its ease of acquisition. Many shipping carriers offer insurance as an add-on service. This makes it convenient to protect your shipments from when they are dispatched. Instead of searching for a separate insurance provider, you can secure your shipments directly through your preferred carrier, saving time and effort. 

The comprehensive coverage offered by shipping insurance is another reason it is deemed an invaluable asset. Shipping insurance policies typically cover many incidents, including loss, damage, and theft during transit.

Check it out: Shipping visibility: Why it’s important and ways to increase it

3. It offers steady peace of mind

Shipping Insurance is the safety net that every business needs. Regardless of the circumstances, it guarantees compensation if the goods are lost, damaged, or stolen during transit. It eliminates the financial risk associated with shipping goods, offering peace of mind to business owners. This assurance is not just a promise but a guarantee backed by insurance companies. 

Shipping insurance also ensures smooth business operations. It safeguards the business’s ability to fulfill its obligation toward the customer without hiccups, even if a package gets lost or damaged. This uninterrupted service not only offers business owners peace of mind but also helps build customer trust and loyalty.

4. Shipping insurance provides financial security 

Shipping insurance is a critical component of the financial security of any business involved in transporting goods. It protects against potential losses from damaged, lost, or stolen items during transit. When a shipping mishap occurs, businesses are reimbursed for the value of the goods by the insurance company. This shields businesses from the financial strain that these unforeseen events can cause.

Investing in shipping insurance is not only a safety measure, but it also proves to be a cost-effective strategy for businesses. Without insurance, companies would have to bear the total cost of lost, damaged, or stolen goods. However, with insurance, these costs are covered, saving businesses substantial money in the long run.

5. It helps reduce unexpected liabilities

In commerce, unforeseen events can and do occur no matter how well-prepared and resilient your business might be. These unexpected occurrences, ranging from theft and natural disasters to unfortunate accidents during the post-purchase phase, have the potential to cast a shadow on your business’s success.

This is where shipping insurance steps in as your indispensable safeguard. It’s your ace in the hole, the contingency plan you can’t afford to overlook. Shipping insurance guarantees that your business remains resilient even when faced with circumstances beyond your control. 

By insuring your packages, you establish a financial safety net that prevents your business from bearing the brunt of unpredictable setbacks. It ensures you’re fortified against risks, including those that catch you off guard. With shipping insurance in place, your business is fully prepared, providing security against unforeseen threats that could otherwise jeopardize your success.

Types of Shipping Insurance Policies

Shipping insurance is an integral part of a comprehensive business model, particularly for businesses operating in the e-commerce sector. It comes in two primary forms: Carrier Shipping Insurance and Third-Party Shipping Insurance

Carrier Shipping Insurance is the primary insurance shipping carriers provide as an additional service. This type of insurance is often convenient for businesses, as it can be purchased directly when shipping the package. It’s important to note that carrier insurance may not cover all scenarios or the total value of goods. 

In contrast, Third-Party Shipping Insurance providers offer comprehensive shipping insurance policies. These policies provide a higher degree of flexibility and broader coverage options. They frequently include scenarios not covered by carrier insurance, such as theft, natural disasters, or shipping to high-risk destinations.

Maximizing Customer Satisfaction through Smart Logistics

Innoship is a cutting-edge delivery management platform designed to streamline the shipping process for e-commerce businesses. The platform integrates all shipping carriers into a single system, thus enabling businesses to manage their deliveries more efficiently. Innoship provides real-time tracking, automated label printing, and cost-effective shipping options, among other features. By consolidating all shipping-related tasks into one platform, Innoship helps e-commerce businesses save time, reduce costs, and improve their operational efficiency.
Innoship, with its user-friendly solution, rapidly established a significant presence in the Romanian market, forming valuable partnerships with major retail players.

In conjunction with a strategic insurance partner, Marsh, Innoship developed a tailored coverage that covers various risks, including accidental damage, disappearance, and theft, while remaining more cost-effective. Beyond insurance, Marsh’s involvement provided valuable insights into product design and presentation, ultimately creating a competitive edge for Innoship and presenting disruptive opportunities in the market. [3]

In conclusion, shipping insurance is a critical component of an e-commerce business strategy. It protects against common shipping errors financial security, and can reduce unexpected liabilities. Furthermore, it’s an easy-to-obtain, invaluable asset that offers peace of mind.


[1] “The Full Cost of Cargo Losses – Inbound Logistics.” Inbound Logistics, 25 Sept. 2022, www.inboundlogistics.com/articles/the-full-cost-of-cargo-losses/. Accessed 6 Nov. 2023.
[2] Biron, Bethany. “More than 1 in 10 Packages Disappear in Cities according to Report.” Business Insider, Insider, 3 Dec. 2019, www.businessinsider.com/packages-stolen-in-cities-report-2019-12. Accessed 6 Nov. 2023.
[3] “Marsh and Innoship: Working Together to Help E-Commerce Retailers Be Disruptive.” Marsh.com, 2023, www.marsh.com/lt/en/services/affinity/insights/marsh-and-innoship-working-together-to-help-ecommerce-retailers-be-disruptive.html. Accessed 6 Nov. 2023.