Shipping insurance is a great extra to offer if you run a Shopify shop or some other online retail business as it protects the buyer’s purchase, makes them more likely to buy from you, and saves money, too.
Before you off it, however, it is important to know the difference between buyer-based shipping protection and seller-based shipping protection.
One is your responsibility and the other is the responsibility of your customer.
What Is Buyer-Based Shipping Insurance?
Buyer-based delivery protection or shipping insurance is a third-party insurance add-on that the buyer purchases to protect their shipment in case it arrives damaged or just never arrives to them.
It involves the buyer paying a small extra insurance fee through the seller’s shopping cart which gives them the ability to file a claim with the shipping protection provider if something happens to the package.
Rates are usually based on the value of the purchase.
All claims and other communication go through the insurance service, which is responsible for paying for a new shipment and having it sent to the buyer.
What Is Seller-based Shipping Insurance?
Seller-based delivery protection is insurance paid for by the seller to make sure the shipment arrives to the buyer as expected.
If something is damaged or the package never arrives, it is the seller who must file the claim with the shipping protection provider.
They must also send a new shipment to the buyer, then wait for reimbursement by the shipping insurance provider.
Insured delivery by the postal service, other delivery services, or by a specific shipping insurance company and sold according to seller-determined values are popular examples of seller-based insurance.
Sellers Save Money With Seller or Buyer-Based Shipping Insurance
While both options ultimately protect the seller’s purchases, buyer-based shipping insurance tends to offer the most benefit for all parties involved. Buyers have peace of mind and are more likely to buy from a small retailer like a Shopify shop, sellers do not have to deal with the claims process themselves, and sellers do not end up spending extra time on order fulfillment problems.
Most importantly, many buyer-based delivery protection plans are free for the seller.
Delivery Protection Works For Both Buyer and Seller
Though there are some instances where seller-based insurance might be a better choice for certain shipped items, the right buyer-based shipping protection program can work out well for everyone involved.
In either case, sellers should know that offering one or the other can definitely increase sales and ease minds, helping their businesses prosper in these days of increased shipping volume resulting in increased damage and theft claims.