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In November 2002, AuctionBytes conducted a survey about shipping habits. 470 U.S. online sellers participated. The results showed some unanimity in preferred shipping methods, but disparity in the way respondents handled insurance claims. In the last issue, I revealed how survey participants handle the problem of damaged goods and returns and their preferred method of shipping.
In this issue, I'll examine how respondents handle insurance claims with shipping carriers. I also explain how claims should be handled to help straighten out some of the confusion over damaged goods and returns.
How Do Online Sellers Handle Shipping Insurance?
Almost 54% of respondents leave the option of insuring an item up to the buyer, and 41% said that they either ship everything insured or insure the item if it exceeds a certain value. The type of merchandise a person sells may be a significant factor in this decision. When insurance is purchased, 92.2% of respondents said buyers pay for it.
Q) Do you insure the packages you ship?
- 21.5% Every package I send out is insured
- 53.9% I leave the option of insurance up to the customer
- 19.5% I require insurance for items with a value over a certain amount
- 4.0% I don't buy insurance, but will reimburse if damaged
- 1.1% I never insurance packages
How Do Online Sellers Handle Insurance Claims?
The question of how sellers handle insurance claim revealed some interesting results. Nearly 52% of the respondents have the customer return an insured damaged item to the shipping company. According to a spokesperson from the U.S. Postal Service, this is the correct procedure for USPS shipping. If the package arrives damaged, it should be returned immediately to the addressee's Post Office.
Yet 16% of respondents said they have the customer return the item to them (the seller), which could potentially invalidate an insurance claim, especially if the box has been opened. If a box has been visibly damaged, and not opened, the addressee can refuse the package and have it sent back.
There was no clear choice on who should initiate the insurance claim, with 32.4% stating that the seller should initiate the claim, and 40.5% stating that the buyer should. In the case of USPS insurance claims, either party can begin the process in the event of damage. Only sellers can initiate a claim if an item has been lost and must wait a minimum of 30 days to file. If the seller initiates the insurance claim, they should fill out their part of PS Form-1000 and take it to their local Post Office with their receipt from the insurance slip. This will be forwarded to the buyer's post office where the broken item should have been turned in with all original packing. Refunds can be made to either the buyer or seller, and should be worked out between the parties.
If the buyer initiates the claim, then the item has to be taken to their local Post Office immediately with all original packing material. The buyer should fill out their part of the claim form. Again, refunds can be made to either buyer or seller.
The insurance process can be a bit confusing and may cause some stress between buyer and seller. It's important to be firm, but diplomatic, about how the process is handled. According to the USPS, damage claims are generally handled within 2-3 weeks. There is the possibility, if the seller chooses to receive the insurance check from the USPS, that reimbursement can be made to the customer earlier. That's a personal decision. If you do decide to refund your customer before an insurance claim is settled, make sure that they have returned the item to their Post office, and prepared their part of the insurance form before you send a refund. You can check the status of your claim by calling USPS Accounting Services in St. Louis at 888-601-9328. Have your copy of the PS Form-1000 or insurance receipt handy.
An interesting side-note that I discovered while doing research for this article is that USPS insurance does not cover "Shock" to the package. This means that if an item has been dropped, but the packaging is still in good shape, Postal Insurance will most likely not cover it.
Also, if a package has been determined to be a "total loss" or was lost in transit, USPS insurance will cover shipping costs as well as the insured value of the item. In the case of a partial loss, shipping costs are not recoverable. If the item has been damaged, but is fixable, repair costs are covered, up to insured value amount of the item. You will need to get a written estimate for the cost of the repair and submit it along with the item.
To see the rest of the survey results covered in the last issue, visit http://www.auctionbytes.com/cab/abu/y202/m12/abu0085/s03.
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