When Is Free Coverage Not Really Free? (Updated)

Priority MailWe have all heard the term “There is no such thing as a free lunch”. This applies correctly to most things in life and truer words have not been spoken. In the shipping world, the United States Postal Service started offering free insurance for Priority Mail packages in $50 and $100 increments. On paper, this sounds like a great offering for shippers of all sizes. Now the USPS can compete with FedEx and UPS with offering a small portion of default coverage free of charge.

But when is “free” not actually “free”? When time is involved, “free” can start costing you money. Filing a claim for a lost or damaged package against this “free” insurance can be a major time drain. Take this example of filing a claim for a package that was lost in transit, but scanned as “Delivered”. This is a real, active (as of 12/17/2013) claim for a real package lost in transit.

  1. Filing the claim
    Visiting the USPS website to file a claim is easy enough. The online claim form is a bit convoluted but manageable. Once a claim is submitted, you now wait. We waited 2 weeks and logged into the website to check the status. See #3, below.
  2. Following up on the claim
    Call the USPS to follow up on a claim and you will be lucky to get a live person on the phone. An automated system will let you know that your claim in “pending”. This means: Please wait a little longer.
  3. The claim response
    The response to our lost package was “USPS records indicate delivery of article”. Yes, the package was scanned as “Delivered” but the recipient never received the package. We now must appeal the decision. The appeal is labeled “First Appeal Submitted”. It seems like we are getting ready for more than one appeal. Please note, we have never been notified of the claim status. We found out about the status by checking the website and calling the toll free number.
  4. The appeal
    We submitted an appeal online explaining the package was not received.
  5. The first appeal – Denied!
    We were not notified of this, but when we logged in to check the status of the claim, we noticed that the status now read “Denied – First Appeal”.  Since the package was indeed lost in transit, we filed a second appeal. We are now 2 months after the initial claim was filed.
  6. The second appeal
    Pending as of 12/17/2013
  7. The settlement
    UPDATE: 2/3/2014 – Denied.
Screenshot from dated 12/17/2013

Screenshot from dated 12/17/2013

We are not bashing the USPS claim process. The point is that this “free” insurance has now been going on for 8 weeks + with no resolution. If this package was insured with Shipsurance at a very low cost, resolution would have been completed weeks ago. When a claim is filed with Shipsurance, a request for supporting documents is sent out the same or next business day. When these documents (proof of value, proof of loss, photos & repair estimates – if necessary) are received, payment is typically made within 5 business days. Many claims are paid within 1 day! We also provide real phone support without an automated system asking you to say or type a 22 digit tracking number. Our online claims system provides real-time status updates with reminders sent to you on aging claims.

Now, if “free” means spending time hoping for a refund, then the free Priority Mail coverage is indeed “free”. If you or your staff values their time and you want to be able to refund your buyer or recipient quickly, this “free” coverage will end up costing you much more in time and goodwill.

This posting is not a shameless plug to insure your Priority Mail packages with a 3rd party insurer. It is providing the reader options and shows the differences in levels of service. Many small business owners would prefer to spend $1.00 to save 3 weeks of time.


The result of the 2nd appeal has come in. Four months of waiting and submitting documents and the claims was denied. The recipient never received their merchandise.

Screenshot from dated 2/3/2014

Screenshot from dated 2/3/2014

25 Comments+ Add Comment

  • How would Shipsurance handling of the claim be different from USPS with the package tracking showing as “delivered”? Tracking is required as a condition of Shipsurance so tracking results are obviously information that would be considered in your claim process also, correct? The example above makes a very valid point about unfortunate situation, but you don’t explain how Shipsurance would resolve the same situation; you only refer to a claim requiring “proof of value, proof of loss, photos & repair estimates…” With a “delivered” tracking status, how would a seller using Shipsurance show “proof of loss”?

    • Great question. That is why we have the recipient, or intended recipient as it may be, complete a digital affidavit indicating loss. We understand that a “delivered” scan does not always mean the package was delivered at the correct location. With the mountain of packages the USPS deliverers daily, mistakes are bound to be made.

  • It’s all the same to me. After 1 1/2 years of ensuring everything with Shipsaver, I finally had to file 4 claims for items either lost in transit or damaged. Remember: it’s 4 claims against 100’s of insured items (free money to them). They require for you to file a claim with either USPS or FedEx first and they won’t pay until you receive a written response from them. (So how are they saving me the trouble?)

    • Tom, 4 claims out of 100’s of packages? Please email so we can assist you and look into your account. We cannot find anything under your name “Tom” in our system as there are quite a few “Tom’s” here 🙂

      As for filing a claim with USPS or FedEx first; This is only if they provide you free coverage. FedEx provides $100 free on every package. For USPS, you only have to file a claim with them for Express Mail. This way, you can receive your full insured value.

  • I have personally worked with both shipsaver and USPS for insurance claims. There is no comparison to the service you receive with Shipsaver. It’s almost impossible to get a “human” on the phone with USPS and you are correct, they will deny it when they can and not give a customer a benefit of the doubt. It’s very quick and simple with Shipsaver and yes you not only get a “human” on the phone, but they e-mail you every step of the way to let you know the status of the claim.

  • How can you (the shipper) say that the package was lost in transit? While it MAY not have been delivered (there are reports of items being scanned as delivered prior to actual delivery), it’s also possible that the package/shipment was stolen from the customer’s mailbox or porch. It’s also possible that it’s actually SOMEWHERE on or near the customer’s home/property. Has the customer checked with other family members, roommates, or visitors who might have picked up the mail and/or signed for a package? Has the customer checked with their neighbors to see if the carrier left the package there. While the carrier SHOULD have left a note indicating where the package was, that doesn’t always happen. Has the customer looked ALL around the outside of their home, at other doors to the house (side doors that don’t get used often, etc.), in the bushes, in baskets on the porch, under the cushions on the swing, in the garage, etc.? Carriers have been known to leave packages in locations other than the mailbox or front door. Assuming none of these things pan out, GOOD LUCK getting USPS to pay on a claim. When they have scanned it as delivered, there just aren’t a lot of ways to prove that it wasn’t. In other words, the government is always right. Even when it isn’t.

  • My only claim with ShipSaver of Shipsurance worked out fantastic. I was able to insure a package going to France by 1st Class Package mail which would not be insurable. It broke on the way to the destination and the recipient took photos which she sent to me and I sent on to ShipSaver. I did have to walk her through the claim process after doing my part and explain that the shipping was also reimburseable as I had included it. Since it was impractical to send the item to the USA factory for repair, the claim was paid very quickly in less than a week. I even got good feedback on Ebay. The payment was to me, but I saw that the money was sent to her. She even used some of the money to buy a partial replacement. This was the only time anything needed to be paid out of hundreds of shipments using this insurance. Two other times packages were believed lost including one that was marked as shipped and not delivered, but both were found before the claims payments were made (one almost got reimbursed and I stopped it). Anyway, my experience has been a good one. One time it took over a year for the post office to settle a claim of nondelivery to an overseas destination. With the post office I think it is 6 weeks or so before you can send in a claim which is too slow for most customers. Then there is the waiting. I wonder why most people on Ebay do not use this insurance.

  • I had a long dispute with the USPS when I shipped a package via USPS Express Mail
    insured it with Shipsaver. The item went to Italy. The item was broken in pieces so I began
    the claim process. Shipsaver informed me that I would have to receive acknowledgement from
    the USPS regarding the breakage since the USPS provided me with $100. “free” insurance
    with Express Mail. I became a screaming, crazed maniac after several months of having
    the post office informing me after I held on for a representative, that the Italian postal service
    does not acknowledge their request for information so basically, too bad for me. Shipsaver
    could not reimburse me the $1200. because of the tie up at the USPS for that lousy $100.!
    After the final appeal, which I still the letter, from the USPS denying any responsibility because
    of the Italian government . Shipsaver’s claim expiration was the next day, so I was frantic
    because I could not get the paperwork from USPS. I finally spoke to the Shipsaver representative
    and explaining for the hundredth time about the USPS and their refusal to pay the $100 so Shipsaver could pay me the $1200, and she spoke to someone and came back and finally said,
    O.K. we will pay the claim! I had sent Shipsaver all the photos and letters, and emails from the
    buyer in Italy during the months of my fight with the post office. Shipsaver came through and I would never insure with the post office again, nor accept any free insurance. I’d send it priority,
    rather then Express Mail to avoid the free insurance. I still get upset when I think about this

  • Shipsurance wrote (on 12-19-13 above): “As for filing a claim with USPS or FedEx first; This is only if they provide you free coverage. FedEx provides $100 free on every package. For USPS, you only have to file a claim with them for Express Mail. This way, you can receive your full insured value.”


    According to the USPS website, it looks like at least THREE of the USPS international delivery services provide free insurance coverage:

    1) Global Express Guaranteed® Insurance
    Our Global Express Guaranteed service automatically covers up to $100 in loss, damage, or document reconstruction.

    2) Priority Mail Express International™ Insurance
    Priority Mail Express International includes document reconstruction insurance up to $100 and merchandise insurance up to $200 against loss, damage, or missing contents.

    3) Priority Mail International® Insurance*
    Uninsured Priority Mail International parcels INCLUDE INDEMNITY AGAINST LOSS, damage, or missing contents.


    Does this mean that First Class Mail International is the ONLY international USPS mail service that will not cause a delay in claim processing with Shipsurance/Shipsaver?

    • Scott, You do not need to file a claim with the USPS for First Class Mail and Priority Mail International shipments.

      • Thank you for the reply!

      • Do you need to file a claim with USPS for domestic priority mail if also insured with shipsurance?? Does shipsurance use the USPS claim payment toward the total amount insured?


        • No, you do not have to. you should not file 2 claims as you would be profiting from the insurance.

  • Next question for Shipsaver / Shipsurance:

    USPS First Class Mail International is limited to 4Lbs. and $400 in value, according to the USPS website.


    Is the $400 limitation only applicable to those who insure via the USPS?

    In other words, is the $400 limitation *not applicable* to us if we use USPS First Class Int’l for packages over $400 BUT insure them with Shipsaver as usual, i.e., for the item’s actual price plus shipping cost, even above $400 value, regardless of the USPS $400 limitation?

    • Scott, The $400 limit is a USPS limit, not our limit.

      • Thanks again, both of these answers are very helpful!

      • Hi, Could you please confirm this–i.e. $400 limit only applies to USPS–as I read it all countries restrict the value for 1st Class (and flat rate priority envelopes, small package to $400.

        I you sure you will insure over $400–and that there is no “limitation” in you policy stating shipper must follow countries restrictions etc.


  • I’ve only had to file one claim since I started using ShipSaver and it was quite easy and payment was timely made on the claim. I was impressed with the service and will continue to use them. I also love that they offer insurance for international 1st class!

  • I have used Shipsaver for a few years and filed a few claims which were always handled quickly and professionally and without red tape. I filed one claim with the post office which was painful to file although I eventually did receive the money. The recipient was required to bring back the package to the post office in order to settle the claim for broken items. That is a problem when you are the seller and have to rely on an unhappy (or dishonest??) buyer to get your money. I prefer the affadavit that Shipsaver relies on to prove the loss. My biggest complaint with the USPS insurance is that it does not reimburse the seller for the cost of the postage. That may be a large part of the cost and with Shipsaver you insure it for the full value, including postage. I still buy Shipsaver for real peace of mind.

  • So if a package breaks or, is lost through EMS and I insured for 1500 through shipsurance….I only have to file for the 100 through USPS, and my claim will be paid even if the 100 is denied by USPS?

    • Ronda, the USPS decision does not have a direct bearing on your coverage with us. Please note: Priority Express International contains $200 of free coverage from the USPS. Domestic continues to be $100.

  • Just tried to insure a parcel shipped to China valued at $140 plus $$55 shipping charge. Was shipped via USPS Priority Express International. ShipSaver will not allow me to cover this parcel, claiming that the USPS provides free coverage of $200 for parcels shipped via USPS Priority Express International.
    The above posted screenshot example of denied claim by USPS after 8 weeks is exactly why I’d rather have additional coverage by ShipSaver. Gives me total piece of mind to know all my parcels are covered by ShipSaver.
    USPS insurance is a scam and totally worthless! If they can’t discourage you by dragging out their claims process for months, they just deny the claim in the end. I found this out the hard way, ended up by losing the item I shipped at a cost of $265 plus shipping and insurance fee through USPS. Of course, PayPal froze the money in my account and paid the customer for an item she claimed was broken. I never even found out if it had been broken in transit. After months and months of trying to find out if the USPS had been in contact with Canada Post and no progress what-so-ever, I just gave up! That’s exactly how good USPS insurance is!
    My question is: why can’t I pay for ShipSaver coverage on my USPS Priority Express International parcel? I know how worthless USPS insurance is and I want real coverage through ShipSaver! Same with the worthless FEDEX $100 free coverage; another JOKE!
    ShipSaver please just take my money and cover this parcel! I know how reliable your coverage is! What is the point of this thread if you won’t insure parcels with so-called “Free Insurance” that is totally worthless? Please explain!
    Thank you ShipSaver for your wonderful product, flawless service and super support representatives!

  • Had a very similar claim with the USPS Priority Mail delivery last year. Tracking indicated that the item was delivered but the recipient claimed no package was ever received. Claim was filed and USPS denied the claim months later. The good news is that we decided to deal with the local USPS at the recipient’s location while we waited for the resolution of the claim it turns out that the actual carrier indicated the package was put in the mailbox. When we contacted the customer and informed them what their carrier did, the customer went out to check the mailbox again….this time he also checked their next door neighbor’s mailbox..It turns out it was placed in their neighbor’s mailbox. Tandem mailboxes, side by side. Neighbor was not home as they live in their winter home in Florida during the winter months…so no one checked their mailbox. There was no way or contact mechanism to cancel the loss claim with the USPS so we just ignored the claim denied when received, So the USPS was in error delivering the package to the wrong address and we had to take time to deal with the local USPS to find out where it was delivered….luckily it was a small town. We have and always will insure our USPS Priority packages with ShipSaver when the value is in excess of our self insure limit for both domestic and international shipping.

  • Used to not buy Shipsaver on Priority packages. Then learned the hard way the Priority insurance does not cover “theft” off the porch” or mis delivery. We have used Shipsaver for several years on 5 Ebay accounts and have had to file maybe 20 cases. The stress removed from mailing packages Internationally and in the States has been worth every penny. Shipsaver also pays quickly and process is painless. Thankful they are here.

  • I have had to file insurance two claims with Shipsaver over the last few years. Each of these claims were handled promptly and reimbursement for my loses was quick (in a matter of days).
    Worth the price, especially when compared to USPS rates.

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