May 16, 2023

USPS Insurance—The Complete Guide

Arnet Xavier via Pexels

You know that feeling of relief when you finally find a buyer for the item you've been trying to sell? Well, imagine that same feeling, but ten times better, because you know your package is insured and protected in case of any mishaps during delivery. We're talking about shipping insurance provided by carriers like the United States Postal Service (USPS).

Although major carriers like USPS are typically reliable, packages can still get damaged or lost. Statistics show that 20% of online shoppers return products because they are damaged. Products may also get lost completely, leading to frustrated customers and lost profits due to refunds.

With USPS insurance, you can rest easy knowing that your packages are protected, and you can even get reimbursed for damages or losses. This guide will tell you everything you need to know about USPS insurance.

What is USPS Insurance?

USPS insurance is an extra layer of protection that you can add when you send a package through the USPS. It covers you if something goes wrong during shipping, like if your package gets damaged or lost. If things go south, you can file a claim and get reimbursed for the value of your package, up to the amount you insured it for.

This type of insurance is an optional add-on service you can purchase when shipping your items. However, it’s highly recommended, especially if you’re shipping a high-value item and want to protect yourself from unexpected hiccups during delivery.

How Much Does USPS Insurance Cost?

USPS allows you to purchase insurance coverage for the goods you’re shipping for up to $5,000 in indemnity. The fee you pay varies based on the declared value of the items you’re shipping, and it starts at $2.65.

Here’s a breakdown of how much you can expect USPS insurance to cost you:

Merchandise Value vs Insurance Fees

  • $0.01 - $50.00 value = $2.65 insurance fee
  • $50.01 - $100.00 = $3.40
  • $100.01 - $200.00 = $4.30
  • $200.01 - $300.00 = $5.65
  • $300.01 - $400.00 = $7.10
  • $400.01 - $500.00 = $8.60
  • $500.01 - $600.00 = $11.50
  • $600.01 - $5,000.00 = $11.50 plus $1.75 per $100.00 or fraction thereof over $600 in declared value (maximum liability is $5,000)

If you ship your items through Priority Mail Express or Priority Mail services, you will automatically get up to $100 in insurance. If your shipment is more valuable, you should purchase additional insurance, which you can do in increments up to the $5,000 maximum liability threshold.

When Should You Use USPS Insurance?

It's always better to be safe than sorry, so many people purchase USPS insurance to get an extra level of protection and peace of mind. That said, consider using USPS insurance when shipping a valuable item. For instance, you should use USPS insurance if you're shipping things such as jewelry, electronics, or collectibles. 

You should also use USPS insurance when you ship fragile items like glassware, ceramics, or antiques. These items are easily damaged during transit, so adding USPS insurance is a good way to ensure you're covered if anything happens.

Who Should Use USPS Insurance?

USPS insurance isn’t limited to people running ecommerce businesses. Anyone selling an item online and shipping it through the USPS can use it. That means you can use USPS insurance when you’re selling on eBay, or even if you’re just trying to declutter your home by selling with Facebook Marketplace. This type of insurance will offer security to you and your customers when your item is in transit.

USPS insurance can also offer advantages before your item is packed up and on its way to a buyer. Offering insurance can improve your customers’ satisfaction and confidence, especially in online transactions where many customers are hesitant to purchase from a seller they don't know. You can show prospective customers that you take shipping and delivery seriously and are willing to take responsibility for any issues that may arise. This level of professionalism can lead to increased trust and more repeat business if you choose to sell online again.

What Does USPS Insurance Cover or Not Cover?

USPS insurance covers the loss, damage, or missing contents of your package during transit. It covers a wide range of items, including merchandise, gifts, and personal belongings, but there are some limitations and exclusions to be aware of. Here are some examples of what's covered and what's not covered by USPS insurance:

What's covered:

  • Items that are broken or damaged due to mishandling or rough treatment during shipping
  • Missing contents
  • Fully lost or stolen packages

What's not covered:

  • Items that are prohibited by the USPS, such as illegal or hazardous materials
  • Losses due to delay or inconvenience, such as missed business opportunities
  • Items that are not packaged properly and according to USPS guidelines
  • Perishable items
  • Live animals

Make sure to read the terms and conditions carefully before purchasing USPS insurance.

How to Package an Item to Make Sure It’s Covered by USPS

Proper packaging is crucial when it comes to USPS insurance coverage. If your item is not packaged correctly, USPS may not cover damages incurred during shipping. Here are some tips to make sure your item is packaged properly:

  • Use a sturdy box: make sure the box is in good shape and rigid enough to hold your item's weight without crushing or breaking. If you reuse a box, remove old logos and shipping labels and cover or black-out old addresses written on the box.
  • Use proper cushioning: use enough cushioning material, such as bubble wrap, foam, or packing peanuts, to protect the item from jostling or impact during transit.
  • Seal the box thoroughly: use strong packing tape to seal the box without any openings or gaps. All the sides should close flat, with no bulging.
  • Label the package: clearly label the package with the recipient's address and your return address.

By following these packaging tips, you can ensure your item is protected during shipping and also eligible for USPS insurance coverage if anything goes wrong.

How to File a Claim

If your item is lost, stolen, or damaged during shipping, you can file a claim with USPS to receive reimbursement for the item's value. The process can be tedious, since it requires you to complete paperwork, gather and submit relevant documentation, and carefully follow a series of steps.

You or the recipient can file the claim if you have the original mailing receipt. Here are the steps to follow when filing a claim for USPS insurance:

1. Check the Filing Period

Mail services have different periods for filing claims, so check the specific time limit for your particular shipment. In the case of damaged or missing contents, you can file a claim immediately but no later than 60 days after the mailing date.

If the package gets lost, you should wait to file the claim in the period relevant to the service you used. For instance, if you use Priority Mail Express, you should file a claim after seven days, and after 15 days if you use Priority Mail.

Registered Mail and Collect on Delivery services also allow you to file a claim after 15 days but within 60 days. Services such as the Army Post Office (APO) and Diplomatic Post Office require you to wait for up to 45 days and file within one year. These may not be the best options if you need to file a claim quickly.

2. Get the Right Documents

You’ll need the right documents if you want the USPS to approve your claim quickly. Some of the crucial documents to include in your claim include:

  • The tracking or label number that is indicated on your mailing receipt or packaging label.
  • Evidence of purchased insurance.
  •  Proof of value, such as the sales receipt or paid invoice.
  •  Proof of damage, including photos. You should keep the damaged item, even with the photos, until your claim is processed.

3. File Your Claim

You can file a claim online or by mail. Online filing is faster, and you can do it through the USPS website. You should start by creating a free account that will be associated with your claim.

If you opt to file by mail, you can request a Domestic Claim Form, which the USPS will mail to you. Complete the form and mail it in, along with the relevant documents, to the address provided.

After filing, you’ll wait for the USPS to determine whether they will pay the claim partially or in full, or if they will deny the claim. The USPS will communicate the decision regarding your claim within 5-10 days.

The claim processing time varies and depends on whether your item was lost or damaged. Claims for lost items may take longer than claims for damaged items, since the USPS may initiate a Missing Mail Search to try and recover the item.

If your claim is approved, you’ll receive the claim amount in approximately 7-10 business days. If the USPS denies your claim, you can file a second appeal within 30 days from the date you receive the appeal denial.

Sell Your Stuff Online Hassle-Free With Sella

USPS insurance is a smart investment when selling items online and shipping through the United States Postal Service. It can give you and your customers peace of mind and protect you from unexpected losses or damages incurred during transit. However, the USPS insurance claims process is complex and time-consuming.

If you're looking for a hassle-free way to sell your items online, without worrying about shipping and insurance, consider using a service like Sella. Our expert team will do all the hard work, such as preparing your items for sale, taking stunning photos, negotiating with buyers, and arranging meetups and shipping. If anything goes wrong during shipping, we’ll file claims for you. And, Sella will insure your items against loss, theft, or damages once they’re in our custody. 

Learn more about how Sella works and get started on selling your stuff online.