Postal Insurance

[bmminiparts]

Who is reponsible for the insurance of items sent in the post, the buyer or seller?

The senario

Customer buys an item and pays for 1st class post. Value under £39. Item is sent recorded delivery, but lost/damaged in post. This item would be covered.

If however the item was £100 and the postal option the customer chose was like the example above. The item is again lost/damaged in the post, but the insurance cover is only £39. Who has to cover this shortfall?

I provide different postal options, 1st, 2nd, Special and Courier.

The reason i ask is we are about to add shipping costs to all countries, but there are different costs, depending on speed of delivery and cost of items in the delivery.

If the items total exceeds the basic coverage of the lowest is it the customers responsibilty to nmake sure they have paid enough to cover the insurance for the delivery?

It can be come quite complicated as we base our postage on the weight of the parts in the order. Some could be large, but weight very little and other are very small, but costs are far higher.

When an order is placed it is the responsibilty of the seller to make sure the parcel arrives. If the item does not arrive the agreement is therefore not complete, so would this be the sellers responsibilty?

Has anyone else come across this?

 

[deadgoodundies]

Yes it's always the responsibility of the seller regarding insurance and ensuring it is delivered safely.
Also remember that with Royal Mail you can only claim for the cost price of the products you are selling not the full retail value (they will ask for copies of invoices from your supplier as proof)

 

[bmminiparts]

Hi DGU

Thanks for your reply.

So effectively i need to charge in the 'shipping costs' an allowance for the extra to cover the insurance costs? Or is it wiser to take out a separate insurance for this?

 

[deadgoodundies]

What we tend to do is stagger the delivery options based on the value of the order so for example

£1-£16 1st class (minimum insurance which you get back as stamps from RM)
£16-£70 1st class signed for (up to £39 back from RM - don't quote me on that)
£70-> Special delivery (up to £250 insurance automatically - again don't quote me on that I havent got the official paperwork in front of me)

For overseas check with RM but you can elect to have higher insurance which does cost more but if you are sending goods over to a certain value it's worth it

So in essence we absorb the insurance costs in with the price of our products and shipping charges because we do flat rate shipping so whilst some customers may pay slightly more than it costs us others pay less than what it costs us - so it tends to even itself out.

Unless you anticipate a lot of orders going missing by sending to high risk countries then I wouldn't bother about taking out seperate insurance (not sure if you can anyway) as you would probably end up spending more on that than you will actually lose to theft or loss

 

[KidsBeeHappy]

Unless your items are partic high value, it's best just to self insure. Work out the number of items that go astray, look at that as a percentage of the total amount that you ship, and look at what it costs you to replace the lost/damaged proportion. Then take that amount and divide it over your total sales quantity to get an average amount per sale. If you're really worried, or your margins are very tight, add this amount per sale to either your P&P or sales price.

However, in reality, you'll find that its probably very small. On average less than 5% of items get lost or damaged, and unless their very high cost, or bespoke products then it's usually a matter or pennies per sale, and simply easier to absorb.

 

[bmminiparts]

Thanks for your replies.

I have discussed this a little further with my IT guy and what we will do, is use the sale price as a marker to then decide which postage will cover the cost of sending the item. It will then only list only the postal option covering the value of the parts. It would then remove 1st and 2nd class with higher priced items.