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Sep 21 2016 0

Shipping with FedEx & UPS Loss & Damage Insurance, or Not?

When thinking about loss of goods in transit, our clients often ask about the insurance options that FedEx and UPS offer.  Specifically, the question is whether to choose a default value or declared value of goods for outbound parcel shipments.

Here is a description of each option along with additional details that may be useful for you when determining how to protect the value of your outbound shipments.

Default Value: Fed Ex & UPS

  • Default value represents the amount that Fed Ex and UPS are liable to pay if anything happens to the package, such as any loss or damage.
  • Unless a higher value is declared and paid for, the maximum liability for each package is automatically limited to $100.

Declared Value: Fed Ex & UPS

  • Declared value is not insurance coverage. The declared value of a package represents the maximum liability for the package in the case of loss or damage.
  • Shippers sending goods with values exceeding $100 can choose to declare a higher value for the goods, up to certain maximum amounts and subject to restrictions, by paying an additional charge.  See the screenshot below for UPS examples:

 

The maximum value that can be declared varies by the type of shipment

    • UPS
      • $50,000 or local currency equivalent for a package shipped when a UPS account number is provided.
      • $1,000 or local currency equivalent for packages returned via UPS Print Return Label, UPS Print and Mail Return Label, Electronic Return Label, or 1 UPS Pickup Attempt, Return Services
      • $1,000 or local currency equivalent for a package shipped via a third-party retailer if the package was previously manifested before it was given to the retailer.
      • $999 for packages shipped authorizing UPS to deliver the package without requiring a signature on delivery.
    • Fed Ex
      • Except as limited below, the maximum declared value per package in any FedEx First Overnight, FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day A.M., FedEx 2Day or FedEx Express Saver shipment is $50,000. The maximum declared value per shipment for FedEx Same Day is $2,000.
      • Except as limited below, the maximum declared value per piece (single handling unit) in any FedEx First Overnight Freight, FedEx 1Day Freight, FedEx 2Day Freight or FedEx 3Day Freight shipment is $50,000
      • The maximum declared value for FedEx Print Return Label and FedEx Email Return Label shipments is $1,000 for FedEx First Overnight, FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day A.M. and FedEx 2Day, and $50,000 for FedEx 2Day Freight and FedEx 3Day Freight. The maximum declared value for FedEx Express Tag shipments is $50,000.

If you do have to file a claim, the amount paid on a claim will be the lowest of the following amounts:

  • The cost of repair or replacement of the merchandise up to $100, if there is no value declared in excess of $100.
  • The cost of repair or replacement of the merchandise up to the amount of the declared value, if the package had a declared value.

When making your decision between default and declared value, you will want to think about the quantity you ship and weigh that against how many of those shipments get either lost or damaged. With our many years of experience in shipping with Fed Ex & UPS, the ratio of total shipments to lost or damaged packages is fairly low.  So, for most clients, we recommend choosing default value.

Once our clients choose their option, it becomes the global parameter for all their orders we ship.  Of course, special circumstances do arise and retaining flexibility to make exceptions for certain orders is very important as well.

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