In international trade, a lot can go wrong between point A and point B. Goods can get lost, damaged, or stolen during transit, and when that happens, the financial loss isn’t just frustrating, it can be devastating. This is where shipping insurance comes in.
Whether you’re an experienced importer or just starting to ship products across borders, understanding how shipping insurance for large orders works is essential. It protects your investment, gives peace of mind, and helps keep your business running smoothly even when logistics don’t go as planned.
At VALO Vietnam, we connect global buyers and suppliers, but we don’t arrange shipping or provide insurance ourselves. Still, we know that navigating the logistics side of B2B transactions can be complex. That’s why we’ve created this guide, to help you understand the basics of shipping insurance and how to protect your business when moving goods internationally.
What Is Shipping Insurance?
Shipping insurance is a service that protects the value of your goods during transit. If a shipment is lost, stolen, or damaged while being transported, the insurance policy can reimburse you, usually up to the declared value of the items.
Shipping insurance is not the same as the carrier’s liability. Most shipping companies (like DHL, FedEx, or UPS) include basic liability in their standard services, but that coverage is typically limited. For example, carriers may only cover a fixed dollar amount per kilogram, regardless of your item’s actual value. If you’re shipping high-value or fragile products, that basic coverage might fall short.
That’s where purchasing additional insurance makes a real difference. You can either get it through the carrier or a third-party provider. In both cases, shipping insurance gives you financial backup if things don’t go as planned.
Common Scenarios Where Shipping Insurance Is Useful:
- A container is dropped during loading, damaging your goods
- A package goes missing during last-mile delivery
- A shipment is stolen in transit
- Your goods are exposed to water damage during ocean freight
If you’re shipping internationally or handling bulk orders, insurance becomes even more critical.
Why Shipping Insurance Matters in International Trade
Risk Is Real and Often Unpredictable
International shipping involves multiple handlers, long distances, and exposure to a variety of risks, everything from extreme weather to customs delays to theft.
When something goes wrong, it’s not just about replacing items. You might also face:
- Missed delivery deadlines
- Lost sales
- Strained business relationships
- Costly disputes over who’s responsible
The Financial Impact of Uninsured Shipments
Imagine losing a $10,000 shipment and only recovering $100 from basic carrier liability. That’s a financial hit most businesses can’t afford. Many small businesses underestimate the actual cost of lost or damaged goods, until it happens to them.
For larger B2B deals, even one uninsured mishap could wipe out the profit margin on a full order.
Reputation Is On the Line
Your customers, whether they’re retailers or other businesses, expect timely and safe delivery. If something goes wrong and you’re not covered, the damage to your brand can be long-lasting. Trust is hard to build and easy to lose. A reliable logistics setup includes risk protection like insurance as part of a proactive customer service strategy.
Types of Shipping Insurance
Shipping with insurance generally comes in two forms: carrier-provided and third-party.
Carrier-Provided Insurance
Most major carriers offer insurance as an add-on service. For example:
- DHL offers Shipment Value Protection for international parcels.
- FedEx allows you to declare a value and pay a fee based on that.
- UPS includes basic liability coverage but offers additional declared value options for a fee.
These options are convenient because you’re dealing directly with the carrier, but they sometimes come with stricter claims processes and more limited coverage.
Third-Party Insurance Providers
Third-party companies, like InsureShield, Shipsurance, or uShip Protection Plan, offer more tailored shipping with insurance, often with:
- Broader coverage (including acts of God, theft, and concealed damage)
- Easier claims processes
- Lower deductibles
They’re especially helpful if you’re using multiple carriers or shipping high-value items regularly.
Carrier vs. Third-Party: A Quick Comparison
- Convenience:
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- Carrier Insurance: Built into the shipping process
- Third-Party Insurance: Separate policy, more control
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- Coverage Limits:
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- Carrier Insurance: Often based on weight or declared value
- Third-Party Insurance: Usually more comprehensive
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- Claims Process:
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- Carrier Insurance: Can be strict, may require extensive documentation
- Third-Party Insurance: Often faster and more flexible
- Cost:
- Carrier Insurance: Varies, typically a percentage of declared value
- Third-Party Insurance: Competitive, especially for large shipments
How Shipping Insurance Works
Understanding how shipping insurance works helps you make smarter choices and get the coverage you actually need.
Purchasing Shipping Insurance for Large Orders
You can purchase shipping insurance in one of two ways:
- Directly from your carrier when you book your shipment (e.g., DHL, UPS, FedEx)
- Through a third-party insurance provider, which can offer broader and more customizable coverage
When you insure your shipment, you’ll be asked to:
- Declare the total value of your goods
- Pay a small percentage of that value as the insurance premium (often 1–2%)
Declaring the Value of Goods
Be honest and accurate when declaring your item’s value. If your claim doesn’t match the declared value, the insurer can reduce or even deny reimbursement. This is especially important when shipping fragile, luxury, or tech items.
Some insurers might also require proof of value (like an invoice or commercial receipt), so keep your documentation ready.
Filing a Claim: What to Expect
If something goes wrong, here’s what you’ll typically need to file a claim:
- A copy of the original invoice
- Proof of damage or loss (photos, damage report, or carrier confirmation)
- A tracking number and shipping label
- A detailed claim form
Timelines vary. Carriers like DHL recommend filing within 30 days of delivery (or expected delivery), while InsureShield gives specific guidance depending on the incident. Make sure to read the fine print when you buy coverage, some providers may only give you 7–14 days to file a claim.
Cost of Shipping Insurance
The cost of shipping insurance is usually affordable, but varies depending on a few key factors.
What Affects the Cost?
- Value of the goods: Higher-value items mean higher premiums.
- Destination: International shipments tend to cost more to insure than domestic ones.
- Shipping method: Air freight and express services might come with different pricing than sea freight.
- Carrier vs. Third-party provider: Each sets its own pricing model.
Sample Cost Breakdown
Here’s a rough idea of what you might expect:
- DHL offers Shipment Value Protection starting at around 1.5% of declared value
- FedEx charges about $3 for the first $100 of value, plus $1 for each additional $100
- ShipBob partners with Shipsurance and others, offering competitive rates based on package type and destination
Remember, these are general estimates. Always check with your carrier or insurance provider for accurate pricing.
How to Keep Insurance Costs Manageable
- Bundle coverage if you ship regularly, some providers offer volume discounts.
- Only insure what’s necessary. Not every package needs coverage. Focus on high-value, fragile, or irreplaceable goods.
- Compare providers. Don’t assume the carrier’s insurance is always the best value, third-party providers can often be more flexible and cost-effective.
Who Should Consider Shipping Insurance?
Not every shipment needs insurance. But for some businesses, it’s a no-brainer.
You Should Strongly Consider Shipping Insurance If:
- You’re shipping high-value goods (electronics, luxury items, machinery parts, etc.)
- You frequently send items internationally, where customs, multiple transit points, and longer distances increase risk
- You run a small business where a single lost or damaged shipment could impact your bottom line
Insurance is particularly useful for growing brands that want to protect their reputation and avoid profit-eating mishaps during scaling.
Tips for Managing Shipping Risks
Insurance is a safety net, but solid shipping practices reduce the chance you’ll ever need it. Here are some proven ways to minimize risk before your goods hit the road (or the sea).
1. Package Smart
- Use sturdy, double-walled boxes that can handle stacking and rough handling.
- Add padding like foam inserts, bubble wrap, or molded pulp trays, especially for fragile or oddly shaped products.
- Seal every package properly with strong tape using the H-taping method to prevent it from opening mid-transit.
- Clearly label fragile, perishable, or high-value shipments as needed.
2. Choose the Right Partners
- Stick with reputable carriers who offer shipment tracking, delivery guarantees, and reliable support.
- Compare insurance options, don’t assume the default from a carrier is always best. Third-party insurance may offer better terms and a smoother claims process.
- Understand the claims procedure ahead of time so you’re not scrambling in case something goes wrong.
3. Keep Your Records Clean
- Keep all purchase and shipping documentation: invoices, payment receipts, tracking numbers, packing lists.
- Take photos before shipping, especially of packaged goods.
- Maintain a shipment log with dates, carrier details, and proof of delivery.
4. How VALO Vietnam Helps You Stay in Control
While VALO Vietnam doesn’t handle shipping or insurance, we help businesses minimize risk by making the supplier-buyer connection more transparent from the start. When both parties have access to clear product specs, pricing, and communication before any goods are shipped, there’s less room for miscommunication or mistakes down the line.
That clarity helps ensure smoother logistics and better decisions when choosing carriers, packaging, and whether or not to insure a shipment, especially for bulk or high-value B2B orders.
Understanding Shipping Insurance with VALO Vietnam
Shipping insurance isn’t just an extra, it’s a smart safeguard against the real risks of international trade, from damaged goods to lost shipments. Whether you’re moving fragile electronics or high-value industrial equipment, understanding how insurance works helps protect your bottom line and your brand’s reputation.
VALO Vietnam plays a vital role in helping businesses navigate international trade with more confidence. By connecting buyers and suppliers through a transparent, commission-free platform, we make it easier to build reliable relationships, before the goods even leave the warehouse.
When you know who you’re working with and have full visibility on product specs, pricing, and terms, you’re already minimizing risk long before insurance even enters the picture.
Explore how VALO Vietnam helps you take the guesswork out of global sourcing. Whether you’re new to international trade or scaling fast, we’re here to help you move smarter. Contact us now!