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5 Scenarios When You Need to Insure Your eCommerce Shipments

As an eCommerce business owner, having insurance for your shipments would save your business a lot of trouble, time, and money. Shipping insurance helps cover the cost of a lost, stolen, or broken product during transit. Did you know that 30% of online orders are returned, and 20% of those products are broken?

Goods insurance is undoubtedly an additional expense to you, but the benefits offered by it outweigh the cost. Alternatively, you pass on the insurance cost to the customers by giving them an option to purchase insurance on their order. In short, insurance is more of a need for an eCommerce business than a luxury.

Here are five scenarios when you should have insurance for your shipments:

1. When the item value is high

If you’re in a business that sells expensive products, then you really cannot afford to lose your product during transport. Items like jewelry, electronics, furniture, and art usually fall under the high-value category. It is unavoidable to sell these products online as they are in high demand and fetch good margins.

Though products like electronics can be repaired, no customer would accept them if they are damaged. You have no option other than replacing them. By insuring such products, you will have a sense of ease, security, and peace of mind that even if something goes wrong, you will be duly compensated by the insurance company.

Remember, if you are selling two products in different price ranges, you don’t have to insure both of them. For example, if you are selling laptops and mousepads at the same time, you have to insure only the laptop.

2. When the item is fragile

Do you sell items that break easily? For example, do you deal with glass items? Then getting insurance is a must for you.

You might have used perfectly-sized boxes and wrapped the product in sufficient cushioning materials. You might have even marked the box as fragile. Even then, the chances of breakage are high because your package often travels through multiple modes of transport handled by hundreds of shipping personnel throughout the shipment journey. Even if it is mishandled by one of them, you will have a damaged product on your hands.

Unfortunately, it is impossible to repair fragile items. Just like high-valued products, you would have to replace them. Not only do you have to bear the extra product cost, but also the shipping cost of the new product.

Having insurance for such products will always help the business as the losses will be refunded.

3. When you are not selling through a marketplace

Do you have your own eCommerce website? Or do you sell through social media platforms like Instagram and Facebook? Either way, you are an independent seller who is not partnering with any of the big marketplaces like Amazon and Flipkart. As a result, you lose the security benefit offered by these large marketplaces that compensate you if anything goes wrong.

To counter this, product insurance is a necessity for you. Most eCommerce businesses are already operating on wafer-thin margins. You do not want it to get impacted even further. A weak return policy can make things worse for you. Customers will take undue advantage of this and return products for no reason. You really cannot afford to take the cost of replacing on your head every time a product gets returned.

This is where insurance can help as it will compensate you for any damages or theft, thus reducing your stress related to the shipping.

4. When you plan on shipping everywhere

Most eCommerce businesses mainly cater to the urban population because it is easier to transport to cities and towns over remote villages. Transport facilities and roads are not well-developed to the rural lands of most countries. As a result, the chances of goods getting damaged due to poor road and vehicle conditions are higher in rural areas.

Now in a country like India, where a vast majority of the population lives in rural areas, it is impossible to ignore them. You have to brave the adverse conditions and keep them satisfied with timely deliveries. This is where insurance is needed as it can compensate for any damage that arises due to poor transportation facilities to these areas.

So if you are one of those businesses that ship everywhere and anywhere, then shipping insurance is a must for you.

Similarly, if you deliver products internationally, your package is going to face a lot of transportation and handling hurdles. The item also can get stuck in the customs and never reach the destination. In such cases, insurance is again going to be your best ally.

5. When logistics companies have limited liabilities on your package

Some logistics companies offer insurance by default for every shipment. Such companies would have already partnered with an insurance provider and will add a small fee to your handling fees. However, the coverage will be minimal. For example, they will offer coverage of ₹5000 on a product that costs ₹50,000. Under such circumstances, it is always better to opt for additional insurance coverage on top of this basic one.

There are a few companies that do not offer insurance on their own. Even in such cases, you have no option but to opt for online retailer insurance of your own.


There is always a never-ending debate on whether a business needs insurance or not. People are skeptical about paying that tiny insurance fee for every shipment when only one in a million is going to be lost or damaged. They fail to understand that even if it is one in a million, the damage caused by it (especially if you are shipping high-value items) is too high for a business to handle on its own. They need the support of an insurance company to pay for the damages so that they can carry on their business without any worry.

However, if you are one of those business leaders who want to focus on the bigger picture instead of handling tiny operational elements like these, you should partner with a company like Powerhouse91. We acquire and operate eCommerce brands and help them accelerate their growth trajectory. To know more, contact us.

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