No one enjoys talking about insurance.

Like trying to bake your child’s first birthday cake – insurance can be dry, complicated and a little bit boring.

Similar to your home and contents or business insurance, shipping insurance is one of those things you don’t often think about until it’s too late.

We’ve collected and analysed a combination of helpful resources to prepare three simple lessons to share with you. These three lessons will help you understand this stuff before offering shipping insurance to your customers.

Lesson 1 – Each courier has a different insurance policy

Let’s get one important thing clear straight away – it’s the customer’s job to ask for shipping insurance – and to organise it too.

Your online business is under no obligation to offer shipping insurance.

But sometimes superior customer service might be what separates your brand from a competitor.

Why should your ecommerce brand offer shipping insurance?

Customers like options – they want the freedom to customise everything about their delivery experience.

Allowing the user to add shipping insurance to an order gives potential customers another reason to trust your brand. You can also offer shipping insurance for free on all purchases and absorb the cost it into your own shipping fees – this way every package you send is insured, and the customer (and your business) is protected.

Our guide – the six things you must know about postage insurance will walk you through the general ins and outs of shipping insurance.

You have the freedom to offer insurance from any of your chosen couriers or your freight aggregator. Do your research on each company’s offering before you commit.

Some providers will cover certain products, but many have specific scenarios or items which cannot be insured. Some couriers won’t cover international transit insurance, some will.

Every company has different restrictions and rules – read the terms and conditions of each policy before you decide on a supplier for shipping insurance.

Lesson 2 – What do each different shipping insurance options cover?

We’ll look at two of the most popular couriers in the industry to show you how different insurance types can be between alternate companies.


TNT offers both international and domestic insurance, as well as different levels of insurance within their domestic insurance.

TNT offer Automatic Transit Warranty, and Extended Transit Warranty. Extended Transit Warranty has three classes, all dependent on the cost of the product.

The more you pay, the more TNT will guarantee – for example, the cheapest warranty covers delivery of the product, and only refunds the cost of the product under certain circumstances (vehicle overturning, fire, collision and other specific scenarios preventing delivery). The more expensive warranties cover more of these specific circumstances. All levels of their warranty exclude breakable items and electronics.


Fastway only offers one level of insurance where customers can claim “the net cost to purchase/repair up to $1,500 if the the contents of a parcel has either been lost or damaged while in transit within the Fastway network.”

In their terms and conditions, Fastway recommends businesses use additional shipping insurance for greater coverage of products.

As you can see – different couriers have varying degrees of insurance, with varying costs to match.

Transdirect offers transit insurance covering all of our courier partners. This warranty is available for all Transdirect customers.

Certain items like breakables, foodstuffs, and currency are not covered by Transdirect’s transit insurance. The customer or the business selling these products will need to find additional insurance for full coverage.

Lesson 3 – How to include shipping insurance costs in your product or shipping

When you offer shipping insurance for your shoppers, you’re adding extra value to your customer’s experience for minimal time, cost and effort. You give customers peace of mind knowing their new package is insured, and you can be confident you’ve covered all your bases.

Apart from making your customers happy – you reduce the time and cost of answering troublesome customer service enquiries.

There are two ways to easily incorporate shipping insurance costs into your online store:

#1. Absorb the cost into the product price or the customer’s shipping cost.

Building the cost of package insurance into your pricing is a super simple way to go. This approach allows you to promote the fact every package your business sends is insured. This offer helps you reduce uncertainty in shoppers and gives you an edge over your competitors.

On the other hand, you also risk losing your customers to competitors if your costs become exorbitant. Smart loyal shoppers can easily tell you’ve bumped up the cost of your product and/or your shipping.

If you decide to go with this option – be super clear about your decision with your customers. Tell them why the cost has changed and what the benefit is to them. Consider offering concessions for regular or loyal customers.

#2. Offer shipping insurance as an extra option

Some customers will always prefer cheaper products and cheap (or if possible – free) shipping. Cater to your price conscious customers and your cautious customers by including shipping insurance as an optional paid extra.

Everyone wins.

Just remember to be explicit about what shipping insurance does/does not cover to avoid any dodgy claims.

If you want to learn more about which postage strategies will help you save time and money, download our Shipping Made Easy guide.