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Deciding How to Insure Your eBay Merchandise when Shipping

It’s a good idea to insure the merchandise you sell on eBay against loss or damage; whether you self-insure an item or insure it through a major carrier generally depends on how much the item is worth. Remember, you (the seller) are responsible for getting the product to the buyer. The lost-in-the-mail excuse doesn’t cut the mustard, and having a delivery-confirmation number doesn’t guarantee anything, either.

You may think that it’s the buyers’ responsibility to pay for insurance. If they don’t, you say, it’s their hard luck if the package doesn’t arrive. This is far from the truth; buyers who don’t receive an item that they’ve paid for can file a fraud report against you. Buyers can also have the payment removed from your PayPal account, and you have no defense against this.

Again, you’d best realize that the responsibility for delivering the goods is in the seller’s hands. So offering insurance to your buyers is good business, and including insurance with every shipment is excellent business.

Self-insuring your items

Some eBay sellers self-insure their packages. In other words, they take the risk and use money out of their own pockets if they have to pay a claim. In this sense, self-insuring is considered seller’s jargon, not an official legal status (only licensed insurance agents can offer insurance).

These sellers are usually careful about packing their items to prevent damage. They also purchase delivery confirmation when using the Postal Service.

Savvy self-insurers usually do not self-insure items of high value. If you sell mostly lower-priced items (under $100) and decide to self-insure, consider making an exception when you do occasionally sell an expensive item. Bite the bullet and pay for the shipping insurance; doing so could save you money and hassle in the long run.

Insuring through the major carriers

All the major shippers are in the shipping business, not the insurance business. Insuring is an annoying — but necessary — sideline to their package transit commerce.

Except for the United States Postal Service, carriers normally cover all shipments automatically (and at no extra charge) for the first $100 of package value. By the way, the package value of an item sold on eBay is the final bid (or Buy It Now) amount. Of course, you can always buy additional package insurance for your shipped items. Should a package get lost or damaged, making a claim opens an entirely new can of worms.

Insurance rates at the major carriers change from time to time, so check out their Web sites to get the most up-to-date insurance rates:

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