So you’ve started selling on eBay, and now you’re worried about your package being damaged or lost in transit.
The best way to protect yourself is to get insurance for your packages.
You might have seen that eBay offers two options. USPS insurance is the default coverage, but it also has another option called ShipCover. Which one should you choose?
We have reviewed feedback from dozens of existing eBay sellers to figure out which one is better.
Stick with us until the end and learn:
- who should choose ShipCover over USPS, and vice versa
- how you can save money on shipping insurance,
- how to avoid overpaying for insurance you probably don’t need, and
- how to protect your business from out-of-pocket expenses for damages and package loss that wasn’t your fault.
Let’s dive in!
What Is ShipCover?
ShipCover insures packages sent by eBay sellers to their domestic or international buyers through USPS.
ShipCover provides insurance of up to $1,000 when you print your shipping label on eBay. It protects shippers in case their packages are lost, damaged, or stolen during shipping.
What Is USPS Insurance?
USPS insurance is the default option on eBay. It covers packages that have been damaged or lost while in the care of the USPS. You can buy USPS insurance for items worth up to $5,000.
Differences Between ShipCover and USPS Insurance
Here are a few things you need to know about ShipCover and USPS insurance to help you decide which one to choose for your packages.
The Cost
When you purchase USPS labels on eBay, you can choose ShipCover to insure your packages. It covers packages shipped to most countries, although there are some nations that are excluded and some items aren’t covered.
ShipCover protection starts at the following:
- $1.70 for every $100 package value for domestic shipments
- $2.83 per $100 package value for international shipments
Check this link for a detailed list of rate information.
When compared to USPS insurance costs, ShipCover insurance rates are:
- cheaper on higher value items, but
- more expensive on lower value items.
USPS covers lost or damaged packages depending on the value of the item. The starting rate is $1.65 for items valued up to $50. The insurance will cost more for items of higher value.
USPS insurance costs based on the value of the package’s content are as follows:
| Value of contents | USPS Insurance cost | ShipCover Insurance Cost |
| Up to $50.00 | $1.65 | $1.70 |
| $50.01 to $100.00 | $2.05 | $1.70 |
| $100.01 to $200.00 | $2.45 | $3.18 |
| $200.01 to $300.00 | $4.60 | $4.26 |
| Every additional $100 value over $300 (for a value up to $5,000) | $4.60 + $0.90 per $100 increase | |
| $300.01 up to $1,000 | $5.40 to $15.41 |
ShipCover may be a more cost-effective option for you if the items you ship are below $100. Meanwhile, USPS insurance may be a better choice if you’re looking for a cheaper option for insuring expensive packages.
Payout Times
Some eBay sellers shared that based on their experience, they prefer ShipCover because submitting a claim is fast and easy compared to USPS insurance.
They say it usually takes a few days wherein USPS insurance claims take months to process, which sometimes end up in denied claims.
Meanwhile, many eBay sellers reported that they were disappointed with USPS insurance when it came to filing claims.
Payout times are expected to take weeks at least but the general consensus of users says that it takes months before they receive the payout. According to the testimonials of some eBay sellers, USPS seems to drag its feet when processing claims.
ShipCover insurance labels do not indicate that the package is insured, unlike USPS insurance labels, which say USPS insured. You don’t see this word indicated on the package.
You and eBay are the only ones who know that the package is insured. It may keep items safer since thieves are more likely to target high-value packages.
Government Backing
Unfortunately, ShipCover isn’t a legal insurer since it’s not backed by the government. Therefore, it’s likely that the company can go bankrupt anytime and when that happens, all pending claims will disappear, too.
Still, ShipCover is owned by eBay, and with the growth of eCommerce, bankruptcy is probably less likely to happen.
As for USPS, it’s backed by the government and has a longer business history than ShipCover. It’s more stable and reliable if you consider how long it’s been in business.
Should You Choose ShipCover or USPS Insurance?
You need to consider several factors, like the ones mentioned above, before you can decide whether to go with ShipCover or USPS insurance.
ShipCover is a better option if you want faster, more convenient, and reliable insurance claims, especially for high-value items. In doing so, you don’t have to make out-of-pocket expenses for too long to cover the loss or damage.
Getting your payout claims sooner will allow you to carry on with your business more quickly. It also lessens out-of-pocket costs when you have to refund your customers for lost or damaged items.
You may find yourself in a negative cash flow situation while you wait for your USPS payout. However, if you're looking for an insurer with a longer track record, USPS insurance comes out ahead over ShipCover.
The decision is up to you based on your needs, experience with each provider, and so on.
Do You Need Insurance Coverage?
Let’s take a step back and think about this question: Do you even need insurance coverage?
You have to consider the value of your items and your shipping volume when determining whether you need insurance coverage or not. You might also be selling items that are excluded by insurance providers because they’re perishable or deemed harmful.
If you’re a casual shipper or you send mails and items that don’t have that much value then insurance may not be necessary. But if you’re running a business or a seller on eBay who ships valuable items regularly, then you need insurance.
Major shipping carriers, such as USPS, are generally reliable. But there are still instances when packages get damaged or lost. A whopping 3 billion packages are lost and damaged every year. A report in the New York Times revealed that 15% of online shopping deliveries never make it to the intended recipient in major cities due to theft or logistics issues.
In any event, it is essential for eBay sellers like you to be properly insured with a reliable company like USPS Insurance.
When your packages are delayed or damaged, your clients will expect to receive replacement packages right away or a refund. Instead of covering the losses for damaged or undelivered packages out of pocket, you can get your items insured, instead.
ShipCover has established a reputation for processing and paying claims faster than other insurers.
When Do You Need to Get Other Types of Insurance?
You need to get other types of insurance coverage if you’re shipping with UPS or FedEx because ShipCover isn’t available through these shipping providers.
ShipCover doesn’t insure shipments to certain countries and doesn’t cover certain items. Please refer to the table below.
| Countries Excluded From ShipCover Insurance | Items Excluded From ShipCover Insurance |
| Belarus | Coins |
| Côte D'Ivoire (Ivory Coast) | Bullion |
| Cuba | Loose diamonds or stones |
| Iran | Stocks |
| North Korea | Bonds |
| Myanmar | Currency |
| Russian Federation | Deeds |
| Sudan | Evidences of debt |
| Syrian Arab Republic | Traveler's checks |
| Zimbabwe | Money orders |
| Gift certificates | |
| Calling cards | |
| Lottery tickets | |
| Admission tickets | |
| Any other negotiable documents | |
| Plasma televisions or monitors |
Please note that ShipCover insurance isn’t available for packages shipped under the eBay Global Shipping Program (GSP). GSP handles your international shipping to make selling abroad easier.
You can buy insurance coverage from your preferred carrier that will transfer the package to the domestic shipping center. You may also choose USPS Priority Mail Express International so your packages are covered when shipping internationally.
Can You Charge Your Buyer For Shipping Insurance?
eBay prohibits sellers from directly demanding or asking buyers from paying shipping insurance. The seller is responsible for paying the insurance cost so that they’re covered or they can file a claim in case their package was lost or damaged
As for the buyer, eBay’s money-back guarantee requires the seller to refund them if the package was lost, damaged, or doesn’t come in “as described” condition. When you’re covered, you don’t have to worry about out-of-pocket expenses when refunding your customers.
As a seller, you should factor in all the associated costs, such as the product cost, labor, packaging, and marketing, when selling items on any platform so you can come up with the appropriate price. You may include the insurance cost when determining the final cost of your products.
Final Thoughts
ShipCover and USPS insurance are two options to choose from when you want to get insurance coverage for your eBay packages. ShipCover stands out if you’re looking for an insurer that processes and pays claims faster. Its rates are also less expensive for cheaper items.
If you’re shipping expensive packages, you should consider USPS since it’s more cost-effective rates for costlier items. However, USPS insurance is slow when it comes to paying claims.
In terms of dealing with an established insurer, USPS insurance is a better choice since it’s backed by the government. As for ShipCover, there’s a chance that it can go bankrupt and when that happens, your insurance claims will go down the drain.
Aidan has been writing about personal finance for over 6 years. Prior to this, he worked as a Corporate Finance Analyst where he specialized in Due Diligence, Company Valuations and more. He is a CFA charterholder.
