Ensure you have the right Parcel Insurance!
Written by Phil Loynes
Ensure you have the Right Parcel Insurance!
Courier enhance cover is a type of insurance that protects your belongings against loss or damage while in transit with a courier service. It is an optional add-on to your regular shipping costs, and it can give you peace of mind knowing that your valuables are protected.
Sending an important parcel can be stressful enough. Making sure the parcel is ready and packaged well, counting the seconds before you close for business that day and hoping the courier driver will turn up on time. The l ast thing you need is for that important parcel to arrive damaged to your customer, or for it to disappear into thin air!
What makes matters even worse is when you realise that the terms and conditions of the enhanced cover that you opted to take means your claim is not valid, even though you already paid for the cover!
Companies will regularly demand a payout from couriers who damaged or lost their parcels, stating that their parcels were insured, only to be met with a response similar to Inigo Montoya in the film The Princess Bride “You keep using that word. I do not think it means what you think it means.”
Here we are going to look at some of the key things to consider when sending important parcels, and how to make sure that you really are covered. This is not an exhaustive list, and it is so important that you do your own research before sending valuable parcels, but this guide will give you a few pointers to get you started as to some of the most common reasons for insurance claims on parcels being rejected by the couriers.
Reasons for claims being rejected:
Enhanced cover was not chosen
This may sound obvious, but in order to be covered by courier enhanced cover, the item must be declared for insurance. This means that you must provide the courier service with the value of the item and pay the additional fee to add enhanced cover to your shipment. If you don’t take out enhanced cover on your shipment, the courier will only offer a nominal amount in the event of a successful claim for loss or damage, while some couriers may not offer anything at all. These tend to be the cheaper couriers, and so you will want to consider if sending your valuable parcels with them in the first place is a good business decision in the long run.
The item is not properly packaged
If the item is not properly packaged, it is more likely to be damaged in transit. Courier services will often reject claims for items that are not properly packaged. This is one of the most common reasons in fact for rejected claims. Even if you have paid for enhanced cover, this does not guarantee that the courier will pay out in the event of a damaged parcel if you have sent your parcel in packaging that does not satisfy the courier’s terms and conditions. Take a look at our guide to packaging parcels for tips on how to ensure your parcels are up to the couriers standards.
Reasons beyond the couriers control
Courier services will often not cover losses or damages that are caused by what they deem an act of God, such as a natural disaster, severe weather, alien invasions etc. They will also often not cover damages or loss due to war, which has become much more of a consideration in recent years due to conflicts in Europe. Likewise couriers will not cover losses or damage due to piracy. While it is not possible to predict sudden severe weather or natural disasters, you should consider carefully when sending to areas that have lots of issues with piracy or war.
The item is lost or damaged due to the negligence of the recipient
If the item is lost or damaged due to the negligence of the recipient, such as refusing to accept the delivery, the courier service may not be liable. Make sure that your recipient is fully aware of the importance of their part in the receipt of the goods, and especially if there is any customs clearance involved. Delays due to items being stuck in customs that lead to items becoming unusable will often mean the cover becomes invalid.
Items that are prohibited or restricted by law
This one again sounds obvious, but this doesn’t just include items that would get you arrested at an airport if found in your luggage, such as explosives, weapons, firearms, flammable liquids, and controlled substances, etc. Even if you do have permission from the courier to send hazardous goods, you would not be covered for sending items that are completely legal in many circumstances but are not permitted to be shipped to the destination. Examples of this can include alcoholic beverages going to countries or states that do not allow the importation of alcohol, literature or books that are banned at the destination country, food or medicines that are either banned or don’t have the correct accompanying paperwork or licences. If any of these things are the case, in the event of loss or damage, or even the goods being destroyed or seized by customs, the courier will not pay out.
Items that are considered to be high-risk
This includes items such as jewelry, art, and electronics. Often these items will not be covered by the courier either due to their higher risk of being stolen or damaged, or sometimes in the case of art, due to its subjective value. For example, you may sell a painting for £1,000,000 and in the event of damage or loss, the courier will pay out for the value of the canvas and the frame, disregarding the price it was sold for. This is one of the most important points to consider when sending goods with a high sale value.
Cost value
This is often the most forgotten element of courier enhanced cover that companies fail to consider or even know about. In the event of damage or loss, the couriers will pay out the cost value of goods being sent, not the sale value. So if you bought screwdrivers that were manufactured in China for £1.50 per screwdriver, but sold them for £10.00 each, the courier will only pay out the £1.50 cost price that you paid for them, and only if you are able to prove that value by producing a manufacturer’s invoice to yourselves (not a sales invoice to your customer).
Private shipping insurance
An alternative that you may want to consider if you regularly send high value shipments, or just want to cover all your shipments in transit, is obtaining private business shipping insurance from an insurance provider. Companies will sometimes be able to obtain an insurance policy for their shipping, and in many cases, depending on your shipping profile it can work out more cost effective than using the courier’s own cover on a shipment by shipment basis. Instead the insurance provider can often cover you for all of your shipments. It can also in many instances pay out a lot quicker than the courier’s processes for claims. Many of the insurance providers will stipulate that you must follow the courier’s own terms and conditions to be valid, so you will want to make sure you check the terms and conditions, as it may be that you are obtaining cheaper insurance cover, but not necessary changing the terms of your cover.
The last point is one of the most important to consider when deciding how to make your business plan when it comes to covering your goods in transit. You are paying to protect your products, NOT your sales. In the event of a loss or damage, you are going to be recovering the item that was damaged or lost, NOT the transaction with your customer.
In the event of a damaged parcel, you will likely send your customer a replacement one immediately, and make a claim for the shipping costs along with the cost of the goods. In the event of a lost or missing parcel, the decision becomes a little more difficult. Couriers can often take months to complete a search for a missing parcel, before they will eventually confirm the goods are lost and process a claim. In that time, you will need to make a business decision as to whether you send a replacement to your customer, or wait and see if the parcel is found. If the parcel is found, the courier will simply deliver the goods or return them to you at cost.
In summary, what you choose to do will vary based on your needs. In the end, it will be up to you to decide based on your business plan what the best options are for you. If you think that your items are not valuable enough to justify insurance, and you can afford to send out replacements for any damaged or lost parcels, then that could be a choice you make. If you do need to insure your parcels, make sure that you know what you are paying for, because the couriers will not reimburse you for enhanced cover that you didn’t follow the terms and conditions of.
Nobody wants to think about their parcels being damaged or going missing, and that is why it is important to make sure that you have decided as part of your greater business plan what you will do in the event of either of them happening. Peace of mind will come from having a process in place for your company internally, and also knowing what the procedure is for making a claim if that is necessary.
With all that said, may your parcels arrive on time and in immaculate condition, and may your missing parcels be found quickly!
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