Shipping Insurance for eBay® Sellers

eBay© has decided to change many of its seller rules and programs. Of interest to many is their removal of optional charges for shipping insurance. Starting September 22, 2009, shipping insurance will no longer be included in the purchase flow as either an option or requirement for buyers. The explanation hinges on the buyer  experience and expectation from buying goods via the Internet. eBay© explains that buyers do not purchase shipping insurance from other e-commerce websites so they should not have to do it from their site. It should be included in the cost of the transaction and is for the seller to procure (or not to) as they choose.

In the past, eBay© sellers were able to transparently pass the cost of insuring their shipments directly to their buyers. This came in the form of including insurance in the transaction at no cost, offering optional insurance for a price, or mandating insurance is added to the sale at a cost to the buyer. These options allowed a degree of flexibility for the buyer and the seller when determining the actual cost of insuring a shipment.

A seller offering insurance to the buyer never quite made sense. Shipping insurance is for the seller, NOT the buyer. If a package arrives damaged or does not arrive at all, the buyer will be made whole again; insured or not insured. They can file a charge back through PayPal© or through their credit card company. Without insurance, the seller is left without the item and without the payment.

Moving Forward
The cost for shipping insurance now must be moved into the listing price or included in the shipping & handling fee. At first glance, this can be a difficult change for many sellers. Questions arise such as:

  • How do I know how much to charge for insurance if I do not know the final bid?
  • Should I just self warrant and eat my losses?
  • This will raise my prices and people will not buy from me. How does this help me?

There is no one answer that will satisfy everyone, but we believe that communication and education will be the best option and ultimately be a selling point. It is the sellers responsibility to get the item or items to the buyer in one piece. If a seller decides to insure the item and wants to pass the cost to the buyer, we suggest: Add the amount to the listing or shipping & handling fee. The listing should explain that the item is fully covered for loss or damage while in transit. The seller should make the buyer feel confident that if something were to happen they will take care if it. They should believe it is a no-risk transaction.

Insuring with a Third-Party Shipping Insurance Provider
Fortunately for all eBay© users, there is a good option available to cover these shipments: purchase comprehensive, low-cost shipping insurance from a 3rd party. As a shipping insurance company, Shipsurance has been insuring eBay sellers for many years. Our low rates make adding coverage to all  outbound shipments affordable for the seller and the buyer. Not only are the rates low, but the claims process is straightforward and always fair. We also have a special computer application called eReport for eBay© that connects to your eBay© account and allows users to insure with us with just a few clicks. We also have an option to insure only a few shipments (ad hoc) for those buyers who only want to insure a small portion of their transactions. Coverage is available to all U.S. domestic locations and most International locations. Shipments sent via First Class International Mail are covered, too.

The changes that are being made are forcing sellers to rethink the way they do business on eBay©. Not only is the managing of shipping insurance changing, there is a whole slew of other changes that are listed here. eBay© is changing to a stricter model that mimics the general e-commerce store experience and those sellers that want to continue to take advantage of this platform must make changes to continue to excel.

4 Comments+ Add Comment

  • I just stumbled upon this post and have a question. If “shipping insurance is for the seller” how come I see some As See On TV websites offering to sell me insureshipping for $3.99 as an added cost? Here is the one I found: https://www.notanglebrush.com.

    Shouldn’t the info mercial website insure my shipment for me by this rational?

    • FOB – Thank you for pointing this out. This $3.99 offer from “InsureShip Insurance Program” is purely for the profit of the seller. Insurance is for the seller, not the buyer. Any buyer who pays for this is paying for double protection. If a package is lost or damaged, they will be protected from their credit card company or PayPal. We might need an updated blog post for this… 🙂

  • What profit percentage does eBay receive from Shipinsure when that service is purchased in conjunction with check out and label printing through eBay?

    • Vicki – The insurance offered by eBay in the check out and label printing through eBay is not our insurance. They are reselling insurance from Fireman’s Fund. We assume you can find out their profit’s from their annual reports.

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