Whether you're shipping iPhones or uncut diamonds across the nation or globe, you need to know that your valuables are protected from damage and loss. With FedEx, there are multiple ways to insure against worst-case scenarios.
In fact, FedEx provides optional insurance coverage you can purchase. However, it has significant limitations. Thus, for most commercial shippers, pairing coverage with third-party insurance is critical to providing complete protection.
Understanding FedEx Shipping Insurance
The first thing to understand is that FedEx does not offer “insurance”. While the term may be used around casually, FedEx does offer insurance-like coverage referred to as “declared value.” As is stated directly on FedEx’s website, “declared value is not shipping insurance.”
Like many shipping service providers, FedEx has explicit policies on their liability—exactly how and how much they’ll reimburse their customers in case of loss or damage. When they accept a package for parcel delivery, it automatically includes $100 liability coverage. This is their standard limit of liability and is included in the shipping rate paid. To that end, if the package is lost or damaged, they’ll reimburse up to $100. However, the package has to be:
Lost or misdelivered by FedEx (not, for instance, stolen after delivery), or
Damaged by FedEx (vs. damaged outside of FedEx’s handling or due to poor packaging or an accident).
It’s also important to note that reimbursement isn’t automatic—you’ll need to file a claim that proves that the damage occurred and that FedEx was at fault. Plus, regardless of whether it’s under the basic $100 coverage or if you purchased additional insurance coverage, FedEx will only reimburse the lowest amount of:
Repair cost
Depreciated value
Replacement cost
Further, there is no coverage for:
Prohibited items such as firearms, cash or currency, or tobacco products
Declared values over maximums allowed in the FedEx Service Guide
The misdelivery of “information” (which isn’t defined by FedEx)
Types of FedEx Declared Value Coverage
In addition to the basic $100 coverage included for each package they accept for delivery, FedEx allows you to choose (and pay extra for) additional liability coverage by declaring the value of a package.
Declared value coverage is available when you create your FedEx shipment. Anyone can declare value of up to:
$50,000 for most delivery types
$2,000 for FedEx® SameDay
$1,000 for easily damaged items per the FedEx Service Guide (art, film, glassware, etc.)
$500 for most FedEx® Envelope or FedEx® Pak deliveries
Customers that frequently ship high-value items such as jewelry can apply for a FedEx® Declared Value Advantage contract, which will allow them to declare value up to:
$100,000 on domestic shipments
$25,000 on shipments to select international destinations
Specific to FedEx International Priority:
Declared value limits might vary based on the destination country.
Check the FedEx International Service Guide for specific details and restrictions.
Rates are based on how much value you declare and what shipping service method you choose (or as negotiated via a FedEx Declared Value Advantage contract). Note, that any package with a declared value of $500 or more will require a direct signature by the recipient.
The anticipated 2025 FedEx rate increase will likely affect the costs associated with purchasing additional declared value coverage, necessitating a reassessment of shipping insurance strategies for businesses.
Exclusions and Limitations
FedEx's declared value coverage comes with specific exclusions and limitations. Items like cash, precious stones, and certain electronic devices may have limited or no coverage. Additionally, coverage may be denied if items are not properly packed or if they fall under restricted categories as detailed in the FedEx Service Guide. For example, fragile items must be adequately packed to withstand regular handling. Understanding these limitations helps shippers ensure compliance and avoid denied claims, providing clarity on what is and isn't covered under FedEx's insurance policies.
Other common FedEx package exclusions:
Live animals
Cash and other monetary instruments
Items with declared values exceeding the coverage limit
Damage caused by improper packaging
How to Determine the Cost for Purchasing Additional Declared Value Coverage
As of the writing of this article (2023), the additional declared value coverage charge for shipments valued at $100.01 - $300 is $3.90. Note this amount typically increases each year with the general rate increase.
So, if your shipment is valued at $102 and you add declared value coverage, you’ll pay an additional $3.90 to insure an extra $2 in value (remember, the first $100 is already covered by FedEx’s $100 standard limit of liability), which obviously makes no sense. If your shipment is valued at $299, you’ll pay an additional $3.90 to insure an extra $199 in value ($299 - $100). The point is, you have to decide at what value it makes sense to purchase additional coverage, if at all.
For shipments valued over $300, the additional charge is $1.30 per $100 of declared value (or portion thereof). Note this amount also typically increases each year with the general rate increase.
For example, if your shipment is valued at $950 the math works out as follows:
First $300 in value = $3.90
$301 - $900 in value = $7.80 ($1.30 x six $100 units)
$901 - $950 in value = $1.30 (one $100 unit)
TOTAL (ADDITIONAL DECLARED VALUE COVERAGE CHARGE) = $13.00
Benefits of FedEx Declared Value
Although there are alternative coverage options you may want to consider depending on the products you ship, using FedEx’s declared value coverage can help protect your business. Benefits include:
Partial protection against your potential loss of goods during transit
Partial protection against damages based on delayed arrival of goods (e.g. refrigerated product that spoils)
Assistance identifying package value for customs agents
Assistance identifying package value for third-party insurance agents
Risk reduction to your business for owned resources not under your immediate control
Comparing FedEx Declared Value to Third-Party Insurance Options
So, if FedEx declared value covers your loss due to damage, why would you consider other coverage options? Unlike FedEx’s declared value coverage, third-party insurance can:
Cover door-to-door losses, not just damage while in FedEx employees’ hands
Provide recompense if you can’t prove fault or negligence by FedEx
Cover the total value of the item plus the shipping costs
Additionally, third-party shipping insurance options don’t impose the same limits on maximum value that exist with FedEx, or the least-of-three limit (repair, depreciated value, or replacement).
For antiques dealers, artisanal glassmakers, and coin collectors, working through an insurance broker is critical, but it’s not just for shipping rare goods. Any business that relies on FedEx or other carriers should evaluate and consider third-party insurance costs and benefits.
How to File a Claim with FedEx
You can file a FedEx declared value claim online, though it may require more steps beyond just filling out the shipping information form. After logging in to your FedEx account to complete and submit a claim, you may need to:
Provide supporting photos of the packaging and damaged contents
Prove the value through original receipts, itemized repair invoices, or appraisals
Complete an inspection report for declared values under $1,000
Schedule a package inspection for higher declared values
Key Takeaways and Recommendations from Lojistic
Businesses that ship goods need to protect not only the products in transit but the entire shipping outlay. Making sure your goods are protected from loss can be a key piece of the puzzle.
Lojistic can help illuminate FedEx declared value charges, and streamline and improve your shipping arrangements with easy-to-understand shipping analytics that help identify damaged and lost shipments. Our AI enabled analytics platform automatically audits your accounts to identify refund-eligible charges in an effort to recover refunds from your carriers.
Best of all, our technology is free to use. Create a no-risk, no-cost Lojistic account today!
If you're interested in learning more about shipping insurance options beyond FedEx, check out our comprehensive blog on UPS shipping insurance to make an informed choice for your shipping needs.
Sources:
FedEx declared value. FedEx. https://www.fedex.com/en-us/shipping/declared-value.html. Accessed 01 September 2023.
FedEx Service Guide. FedEx. https://www.fedex.com/content/dam/fedex/us-united-states/services/Service_Guide_2023.pdf. Accessed 01 September 2023.
FedEx File a Claim. FedEx. https://www.fedex.com/en-us/customer-support/claims.html. Accessed 01 September 2023.
Author
Bryan Van Suchtelen
Bryan Van Suchtelen
Corporate Director of Parcel Rate Services
Prior to joining Lojistic in 2015, Bryan enjoyed a 26-year career with UPS where his roles included Pricing, Field Sales and Director-level Sales Management of some of UPS’s largest customers.
At Lojistic, Bryan leverages his wealth of experience/expertise to identify and execute supply chain cost management solutions for parcel shippers of all sizes. Bryan has helped his customers reduce their shipping spend by tens of millions of dollars.