Shipping Insurance Calculator

Do You Need Shipping Insurance?

Every shipper absorbs some level of loss - packages get lost, damaged, or stolen in transit. The question is not whether losses will happen, but whether you self-insure (absorb losses out of pocket) or transfer that risk to an insurance policy. For low-volume shippers with inexpensive items, self-insuring may be reasonable. For high-volume shippers or those sending high-value goods, the math almost always favors coverage.

At 0.5% loss rate and 200 shipments per month, that is 1 lost package per month. At an average order value of $100, that is $1,200 in annual losses before accounting for customer service costs, replacement shipping, and refunds. Insurance that costs a fraction of that exposure starts to look very reasonable.

Carrier Declared Value vs Third-Party Insurance

Carriers like UPS and FedEx include $100 of liability by default. To cover amounts above $100, you declare the full value at time of shipping - this is not technically insurance, it is a carrier liability increase. The cost is typically $1.00-$2.45 per additional $100 of value declared.

Third-party insurers like U-PIC (approximately $0.53 per $100) and Shipsurance (approximately $0.55 per $100) offer the same or better coverage at roughly half the cost of carrier declared value, with faster claims processing and fewer exclusions. For high-volume shippers, the annual savings of switching from carrier declared value to third-party insurance can be substantial.

What Loss Rate Should You Expect?

• UPS: approximately 0.5% of packages lost or damaged
• FedEx: approximately 0.5% of packages lost or damaged
• USPS: approximately 0.8% of packages lost or damaged
• Residential deliveries run approximately 30% higher loss rates than commercial

These are industry-average estimates. High-value goods, fragile items, and certain ZIP codes can see significantly higher rates. Your actual experience may vary based on packaging quality, product type, and specific routes.