Parcel Shipping Insurance vs. Cargo Insurance: Which One Do You Need?

Posted on May 19, 2025, by Matt Morelli

Shipping insurance is a critical part of protecting your business, but not all policies are created equal. If you’re a parcel shipper, you may have come across cargo insurance policies and wondered how they compare to the type of parcel shipping insurance offered by U-PIC. While both types of coverage serve to protect shipments, they are designed for different use cases and industries. Understanding the distinctions can help you choose the right coverage for your needs.

Image: Wooden toy truck with small parcels, representing parcel shipping and logistics.

What is Cargo Insurance?

Cargo insurance is designed for large-scale freight shipments, typically covering goods transported by land, sea, or air. These policies are often used by freight forwarders, logistics providers, and companies shipping large quantities of goods via LTL (less-than-truckload) or FTL (full-truckload) carriers.

Cargo insurance policies generally:

  • Cover high-value or bulk shipments
  • Apply to international and domestic freight transport
  • Offer coverage for broader risks, including general average losses, theft, and catastrophic events
  • Require detailed documentation and often have complex claims processes

For businesses moving large volumes of goods in containers, trucks, or planes, cargo insurance is essential. However, for eCommerce businesses, online retailers, or small to mid-sized shippers sending individual packages to customers, a cargo policy may be excessive, expensive, and overly complicated.


What is Parcel Shipping Insurance?

Parcel shipping insurance, like the coverage offered by U-PIC, is tailored specifically for businesses that send small packages through major parcel carriers such as USPS, FedEx, UPS, and regional couriers. Rather than covering entire truckloads or shipments in bulk, parcel shipping insurance protects individual packages from loss, theft, or damage while in transit.

Key benefits of parcel shipping insurance:

  • Flexible coverage: You can insure single shipments or bulk parcels without the need for an annual cargo policy.
  • Cost-effective: U-PIC’s parcel shipping insurance costs 50%-90% less than carrier-provided insurance.
  • Fast claims processing: Unlike traditional cargo policies, which can have lengthy claims adjudication times, U-PIC processes most claims within 7-10 business days.
  • Coverage across multiple carriers: U-PIC insures shipments across all major carriers, giving shippers flexibility regardless of their shipping method.

What is Parcel Shipping Insurance?

Understanding which type of coverage best suits your business is essential. Here’s a quick breakdown of the types of businesses that typically need each:

Business Type Best Fit: Cargo Insurance Best Fit: Parcel Shipping Insurance
Freight forwarders
Logistics companies
Large-scale manufacturers
eCommerce retailers
Online marketplaces
Subscription box services
3PLs (Third-Party Logistics) ✅/❌ (depends on services)

Since parcel shipping insurance can be a cost-effective, flexible option for businesses of all sizes, it’s often the right choice even for companies that might also use cargo insurance. U-PIC’s parcel insurance program offers straightforward, quick claims processing, lower costs, and broader coverage across multiple carriers, making it a smart choice for nearly any business shipping individual packages.


Why Parcel Shippers Choose U-PIC Over Cargo Policies

Parcel shippers need a streamlined, cost-effective insurance solution, and that’s exactly what U-PIC provides. While cargo insurance is necessary for businesses moving entire shipments via freight carriers, it’s often excessive for companies that ship smaller, individual parcels. U-PIC’s parcel insurance program ensures that your packages are protected at a fraction of the cost of carrier insurance, all while making claims easy and hassle-free.

If you’re shipping parcels regularly and want to save money while ensuring your shipments are covered, U-PIC’s parcel shipping insurance is the perfect fit. Get in touch with us today to learn how we can help protect your shipments while keeping costs low.

Integrate With U-PIC Shipping Insurance

Offer a Shipping Insurance solution native to your platform, for your customers
Complete this form and an agent will be in touch shortly