If you are shipping or receiving goods for personal or business reasons you will probably need to know a little bit about freight insurance. Many times the company that is handling the shipping will also handle the insurance. It can be built into the cost of shipping or be an additional charge. You need to find this out up front or you might get sticker shock when you receive your bill.
Even for transactions on eBay shipping insurance is an option on most auctions, no matter how small. Sometimes things happen to freight in the shipping process and items can arrive crushed, broken, torn or not arrive at all. Think Castaway with Tom Hanks. If you choose a shipping service that is large and well known such as FedEx or UPS you will be covered by insurance that they provide. But if your package is something that is irreplaceable or very expensive you might want to ask about additional coverage options. Many times your homeowners insurance will cover items that are being shipped or that you travel with but you need to check for the restrictions and specifications before relying on it.As we mentioned before, shippers will sometimes offer insurance coverage, at an additional charge, but usually only on the declared value or on the truckload. This can get expensive depending on what and how often you are shipping. You can try self-insuring your cargo or freight. Determine what it will cost you to buy the coverage, what your loss record or loss potential is and if you can save enough in insurance and valuation charges to justify the risk. Shippers will most likely provide a basic coverage that might default to somewhere around $25 a pound. If you want to declare a higher value on your freight, your shipping costs will increase. Most truckload carriers are insured for up to $100,000. These figures are from an article written in 2002 for Entrepreneur magazine so you can figure the costs have only gone up for both coverage amounts and shipping costs.
Many times what you are insuring against when shipping is not the damage that might result but the theft of your cargo. When you are importing goods this most likely is what you might come across. Hijacking or fraud can make your shipment disappear, never to be found again. Shippers outside of the United States face this situation with even grimmer statistics. Don't let this stop you from using shipping services. With the proper insurance in place you are covered in the unlikely event of any of these problems.