NFIB

Insurance Options for your Business Packages
03/ 27/ 2002

When shipping important documents or expensive items, many small business owners prefer carriers that provide door-to-door services and require signatures at every step along the delivery route. While this reduces the risk of loss or damage, purchasing additional coverage is often recommended. Costs and availability of additional coverage vary widely, as described in today's Workshop by Jeffrey Moses.

Some of the carriers included in today's article--Federal Express, UPS and Airborne--automatically insure all deliveries up to $100. If a shipped package doesn't arrive or is damaged along the way, coverage up to this amount is free along with proof of actual value. Non-delivery of a simple letter, for instance, would not be reimbursed for the full $100, unless it could be proved that the paper on which the letter was written was worth that amount. A piece of jewelry would be covered up to $100, if the sender has proof of proper appraisal.

If the items you're shipping need coverage greater than $100, the three carriers have differing policies. Here's a quick run-down on what they offer, so that you'll be able to decide which fits best with your business' needs:

UPS (800.742.5877)

After the first $100, coverage is 35 cents per $100, up to a maximum of $50,000. Coverage is available for electronic equipment, machinery and general products. Jewelry and watches cannot contain more than 50 percent gold, silver or platinum to qualify for coverage. Artwork can be insured, but if lost or damaged, the value must be proved by appraisal before a claim can be paid. Art must have been appraised within the previous 12 months, and the artist must still be living.

Claims can be made by sending a copy of the mailing invoice to UPS customer service. A UPS representative may call about the damage or loss, conduct an onsite inspection or determine that damaged items need to be sent back to the shipper to determine actual value. Claims are generally paid within 2 to 3 weeks of filing.

Federal Express (800.463.3339)

After the first $100, coverage is 50 cents per $100, up to a maximum of $50,000 depending on the type of container used. FedEx boxes, envelopes, tubes and sleeves are all covered up to $50,000. FedEx Paks and envelopes and are covered up to $500. The limit of coverage for artwork, jewelry, stocks and bonds and coins is $500.

If a package is not delivered for any reason, a claim can be filed. If a shipment arrives damaged, a customer service representative will call to discuss damages if the amount is less than $100. If the amount is above that amount, a rep may ask to conduct an onsite inspection. Payments of claims usually take 2 to 4 weeks. FexEx maintains the right to either replace or repair a damaged item.

Airborne (800.247.2676)

After the first $100, declared value can be insured for 50 cents per $100, with a $3.25 minimum. Declared value insures only for theft while a package is in Airborne's possession. Shippers who require complete protection need to purchase asset protection, which costs 65 cents per $100. Asset protection covers all types of loss or damage, including undelivered shipments, damage or loss of aircraft, loss at customs and loss or damage due to strikes.

The distinction between declared value and asset protection is critical, because some shippers may think that insuring for declared value means that all possible types of loss are covered.

Items not insurable by Airborne include money, gems, certain precious metals, jewelry and lottery tickets. Artwork and antiques have a $100 maximum coverage. Claims can be filed for up to one year.

U.S. Postal Service

The U.S. Post Office provides various classes of delivery that require a signature by recipient: Certified, C.O.D., Insured Mail, Registered Mail, Signature Confirmation and Express Mail. Of these, only the following allow purchase of extra coverage:

1. Insured Mail. Coverage is available up to $5,000. The price is $1.10 for up to $50 of coverage, $2.00 from $50-$100 and $1.00 for every $100 thereafter.

2. Registered Mail. Coverage is available up to $25,000. Examples: $1,000 would cost $9.00; $25,000 would cost $27.00.

3. Signature Confirmation. Coverage costs $1.00 for each $100.

4. Express Mail This overnight service, which is available to most addresses in the U.S., is automatically insured for $500, with $1.00 for each $100 thereafter.

Claims through the Post Office usually cannot be filed for a certain amount of time after delivery should have been made (in the case of undelivered shipments). Items damaged during shipping need to be taken to a post office, along with the packaging, so a postal worker can make inspection.

Small business owners who ship frequently should consult with their primary business insurer to determine if less expensive coverage can be obtained for certain types of items. Transit Coverage packages can be purchased for special shipments and/or specific types of businesses, such as jewelers or part distributors who constantly ship valuable items. Transit Coverage has become significantly more expensive over the last few years, and since Sept. 11, it has become extremely costly to some international regions.

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