When you're running an eCommerce business, protecting your shipments is a must. Whether you have heard it referred to as shipping protection or package protection, having a safety net in place for lost, damaged, or stolen items is essential for keeping your customers happy and your business running smoothly. But not all forms of protection are created equal, and understanding the differences between package protection services and licensed shipping insurance can save you from legal and financial headaches.
Let’s break it down.
What’s the Deal with Shipping & Package Protection?
You’ve probably seen it during checkout—a checkbox offering shipping protection or package protection for a small fee. It’s pitched as an easy, low-cost way to cover your shipments in case something goes wrong. Sounds great, right? Not so fast.
Here’s the catch: a lot of package protection services aren’t actually licensed insurance. What does that mean for you? It means that they might not follow the same regulations as insurance companies. If things go south—like a denied claim or a customer dispute—you could be left holding the bag, and not the kind that safely delivers goods to your customer.
Because these package protection programs aren’t licensed, they might be operating in a legal gray area. In fact, some businesses are getting caught up in lawsuits for using unlicensed package protection services. That’s a big risk, and it’s something you should definitely be aware of if you’re offering these services to your customers.
So, What About Licensed Shipping Insurance?
Licensed shipping insurance is a whole different story. When you go with a licensed provider—like U-PIC Shipping Insurance—you’re working with a company that follows all the rules. These companies are licensed by the state, which means they have to comply with strict regulations.
This means the coverage is legit, claims are handled properly by licensed individuals, and, most importantly, your business stays on the right side of the law. You’ve also got more recourse if a dispute comes up. Licensed shipping insurance typically covers loss, theft, and damage, just like package protection, but the big difference is that it’s backed by actual insurance laws. That’s the kind of shipping protection you can rely on.
Why Shipping & Package Protection May Not Be Legal
Here’s where it gets tricky. While shipping protection or package protection can seem like a fast, easy solution, if the service isn’t licensed, your business might be violating insurance regulations. Yikes.
Some states are cracking down on these unlicensed protection services, and businesses caught using them could face fines, legal trouble, or worse. You don’t want to be the business owner caught in a situation where your coverage is considered illegal. That’s where the benefit of licensed shipping insurance comes in—everything is above board, compliant, and protects your business and your customers.
There’s even a lawsuit involving companies who offered unlicensed package protection services—highlighted by Top Class Actions—and trust me, you don’t want your business name popping up there.
The Perks of Licensed Shipping Insurance
Let’s talk about the benefits of going with licensed shipping insurance:
- It’s legal – You’re fully compliant with state and federal laws, which keeps you out of hot water.
- It’s reliable – Claims are processed according to legal standards by licensed claims professionals, giving you and your customers a smoother experience.
- Cost savings – Services like U-PIC Shipping Insurance can save you 50%-90% on shipping costs compared to typical carrier insurance. That’s some serious money back in your pocket.
- Revenue potential – For business partners like 3PLs, there’s even an opportunity to increase revenue by offering licensed insurance, without the legal risks.
Bottom Line
While shipping protection or package protection might look like an easy fix, it could end up costing you way more in the long run if it’s unlicensed. The legal risks of offering an unregulated product aren’t worth it, especially when you can get licensed shipping insurance that’s affordable, legal, and keeps your business protected.
Why take the risk when you can go with licensed shipping insurance that ensures both your business and your customers are covered? Peace of mind is just a policy away.