Shipping Insurance vs. Shipping Protection: What's the Difference?

Not All Package Protection Is Insurance

At checkout, you've probably seen the option to add “shipping protection.” It sounds like insurance-but in most cases, it's not. In fact, the difference can affect your compliance, your claims experience, and your bottom line.

Here's what you need to know.

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🛡 Shipping Insurance: Licensed, Legal, Reliable

Shipping insurance is a regulated product sold by licensed providers like U-PIC. It covers loss, damage, and shortage with a real insurance policy backed by underwriters.

• 📜 Fully licensed and compliant in all 50 states and Canada
• 🧾 Pays out full invoice value (not just pennies on the pound)
• 💡 Transparent terms, regulated claims timelines
• ⚖️ Backed by actual legal protections

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🚫 Shipping Protection: Risky Territory

Shipping protection is typically an unlicensed service sold as a fee, often by checkout apps or software companies-not insurers.

• ❌ Not legally insurance
• ❌ Often added automatically (can trigger lawsuits)
• ❌ Vague terms, hard-to-enforce claims
• ⚠️ Can expose sellers to legal risk (esp. in California)

Example: A recent class action (Wolf-Bond v. TA3 Inc.) alleges deceptive use of shipping protection fees that weren't disclosed clearly at checkout.

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🧠 Why the Difference Matters

• Legal exposure: Selling or offering unlicensed insurance can violate state laws
• Reputation risk: Hidden fees and denied claims frustrate customers
• Compliance pressure: California has already taken legal action under § 17200 UCL

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✅ U-PIC: Real Insurance, Real Protection

U-PIC is a licensed, SOC 2 Type II-compliant provider that offers:

• Fast online claims processing (7-10 business days)
• Support for all carriers and platforms (including Shopify)
• Flexible setup: pass cost to customer or absorb it yourself

Don't risk your business on shipping “protection” that doesn't actually protect. Choose real insurance.

Protect your shipments-and your reputation-with U-PIC.