When shipping valuable items, it's essential to understand the differences between declared value coverage, indemnity, and shipping insurance. These terms are often used interchangeably, but they provide very different levels of protection, responsibilities, and reimbursement procedures. Here's a clear breakdown to help you navigate your options.
What Is Declared Value?
Declared value is the dollar amount a shipper assigns to a package to establish the carrier’s maximum liability. It simply raises the cap of what the carrier might pay if a package is lost or damaged. But it’s not true insurance.
Carriers like FedEx, UPS, and USPS allow declared value up to certain limits (typically $5,000–$50,000, depending on the service). Declared value drives additional fees and sets a reimbursement ceiling—but recovery is not guaranteed.
To be paid out, the shipper must prove both the value of the item and that the carrier was at fault. Even then, reimbursement is capped at the lesser of repair cost, replacement cost, depreciated value, or declared value. Declaring more than the item’s true worth won’t increase reimbursement.
What Is Indemnity?
Indemnity is a broad insurance principle: to make the shipper financially whole after a covered loss. In the shipping context, carrier-declared value acts as a limited form of indemnity. But “indemnity” from a carrier doesn’t necessarily mean you’ll be reimbursed fairly or quickly.
For example, USPS automatically includes up to $100 of indemnity on Priority Mail and Ground Advantage, but you still need proof of value—and many exclusions apply. Carrier indemnity almost always excludes consequential damages, lost profits, or broader business risks.
What Is Shipping Insurance?
Shipping insurance—especially when provided by a licensed insurer like U-PIC—is true, full-value coverage. Unlike declared value or basic indemnity:
- It covers loss, damage, or theft regardless of the carrier used.
- It pays out the actual value of the item plus shipping costs, not just the depreciated value.
- It does not require proof of carrier negligence.
- Claims are typically resolved quickly—in U-PIC’s case, within 7–10 business days.
- Coverage can be applied across all carriers in a single streamlined policy.
Most importantly, shipping insurance is regulated as real insurance, with transparent rules, consistent claims handling, and peace of mind for high-value, fragile, or time-sensitive shipments.
Key Differences at a Glance
| Feature | Declared Value (Carrier) | Indemnity (Carrier) | Shipping Insurance (U-PIC) |
|---|---|---|---|
| Who Provides It | Carrier (FedEx, UPS, USPS) | Carrier (limited built-in coverage) | Licensed insurer (U-PIC) |
| Coverage Scope | Carrier liability only | Limited reimbursement, exclusions apply | Full value + shipping |
| Proof of Carrier Fault | Required | Often required | Not required |
| Payout Basis | Lesser of repair/replace | Limited, capped by carrier rules | Full value declared by shipper |
| Claims Process | Slow, complex | Varies by carrier, often restrictive | Streamlined and digital |
| Multi-Carrier Coverage | No | No | Yes |
| Protection Level | Conditional, capped | Minimal, carrier-controlled | Comprehensive, regulated insurance |
When to Use Each Option
- Declared Value: Suitable only for low-value items when you’re comfortable with carrier rules.
- Indemnity: Fine for small shipments where $100 coverage is enough, but expect exclusions and delays.
- Shipping Insurance: The clear choice for high-value, fragile, or business-critical shipments, giving you full-value protection, fast claims, and peace of mind.
The Bottom Line
Declared value and indemnity provide limited, conditional protection—and leave you exposed to risk. For true financial security and reliable claims handling, shipping insurance through a licensed provider like U-PIC is the best option.
Merchants and e-commerce businesses simply can’t afford to gamble with their customers’ packages. With U-PIC Shipping Insurance, you get real coverage, fast resolutions, and superior protection across carriers. It’s not just better—it’s the smart, business-first choice.