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Some sellers use shipping insurance as a way to make extra profit on their eBay sales. This guide will give you the tools you need to make an informed decision about paying for insurance on your shipment.
INSURANCE OPTIONS FOR SELLERS
When a seller lists an item for sale on eBay, s/he has several options regarding shipping insurance. The seller can include the cost of insurance in the shipping and handling charge, make it optional, require an insurance charge for all purchases, or not offer insurance at all. Some of these options should be of special note to you as a buyer. Before you can make an informed decision about these insurance options, though, you should know a little more about the cost of insuring packages.
SHIPPING INSURANCE FEES
There are two main shipping companies used by eBay sellers - the United States Postal Service (USPS) and UPS. (There are, of course, other shipping companies, but we'll focus on these two, as they are the most common.) Each of these companies has set insurance fees that you should be aware of when shopping on eBay.
USPS RATES*
The United States Postal Service (or "regular mail") has the following insurance fee schedule:
Fee . . . . . . . ..... Insurance Coverage
$1.35 ................ $0.01 to $50
$2.30 ................ $50.01 to $100
$3.35 ................ $100.01 to $200
$4.40 ................ $200.01 to $300
$5.45 ................ $300.01 to $400
$6.50 ................ $400.01 to $500
UPS RATES*
UPS includes $100 worth of insurance on all shipments, free of charge. Here is their rate schedule:
Fee . . . . . . . .............Insurance Coverage
$0.00 ........................$0.01 to $100
$1.50 ....................... $100.01 to $300
$.50/$100 ................ $300.01 to $50,000
*These rates are for packages shipped within the US. For International shipments, see the UPS or USPS website for more information.
Now for details on the various options you'll see in eBay listings:
INSURANCE INCLUDED
When a seller includes the insurance charge in the shipping and handling charge, this means that s/he will be held responsible if your package is lost or damaged in transit. If the shipment cannot be located, or is damaged beyond repair, the seller should refund your full purchase price, including shipping. Some sellers will pay an additional fee to the shipping company for the insurance, so that some of his/her losses will be covered in the event of a lost or damaged shipment. Other times, the insurance is included in the price charged by the shipping company (UPS includes up to $100 worth of insurance on all packages they deliver, free of charge to the seller.) Many sellers also "self-insure", which means they don't pay for insurance, but understand it will be their loss if they have to refund a buyer for a lost or damaged shipment. The important thing to you, as a buyer, is that you will not lose any money if the shipping company fails to deliver your package, or damages your item because of poor handling by the shipper.
OPTIONAL INSURANCE
When you see an eBay listing that states that insurance is optional, this means you have the choice whether to pay an additional fee for insurance coverage on your package. The seller will set a price for the insurance charge, and you will have the option to include this amount when you make your payment. Later in this guide, you will find more information that will help you make this decision. Whether or not you elect to pay for optional insurance, make sure the seller is not charging more than the fees shown above for his/her indicated shipping method. While it is perfectly acceptable for a seller to include a reaonable handling fee in the shipping charge, insurance fees should not used to generate profit.
INSURANCE REQUIRED
Some sellers will require that buyers pay a stated amount to cover insurance for their package. It's very important to look carefully at the shipping details for any auction listing you are considering, because it's easy to miss these required insurance fees. Be sure to always scroll all the way down to the bottom of the listing to the "Shipping Insurance" section. If you see an amount listed there as required, that means you must pay that amount, in addition to the final bid (or Buy it Now) price and the shipping charges. As you probably know, when you place a bid or use the Buy it Now option, you are entering into a binding contract to pay for the item. If you overlook a required insurance fee, that is not a valid excuse for backing out of the purchase, so always check this small, but important, detail before you decide to buy. You should always compare the actual insurance fee charged by the shipping company (in the section above) to the fee being charged by the seller. A seller who requires a $10 insurance charge for a $75 item being shipped by UPS is simply using insurance to jack up the starting bid or Buy it Now price, in a way that many uninformed buyers will miss until it's too late. This is not only dishonest and unfair to buyers, it is also a violation of eBay policy.
INSURANCE NOT OFFERED
Some sellers do not offer insurance to buyers at all. This shouldn't automatically be taken as a warning sign. It may mean that the seller simply didn't fill out the insurance information when s/he prepared the listing. Or, it could indicate that the seller understands the "One Basic Truth" about insurance (see below), and feels no need to talk about insurance at all. However, not offering insurance can also mean that the seller will not take responsibility if your package is lost or damaged, so some additional research on your part is needed. Read the seller's terms of service in the listing. Do you see a statement like this: "Seller will not be held responsible once the package is shipped"? (These statements are also common in listings in which insurance is optional: "Insurance is optional, but highly recommended. Seller is not responsible for lost or damaged shipments if insurance is not purchased by the buyer.") Any similar wording should be taken as a sign that you should seriously consider finding a more reasonable seller.
All this being said, the truth is...
ONE BASIC TRUTH ABOUT INSURANCE
The simple fact of the matter is that the seller is responsible if your package is lost or damaged by the shipping company. It just doesn't matter whether you bought insurance, the seller bought insurance, or no one bought it. Once you pay for an eBay item, the seller has an obligation to deliver your purchase to you in the condition in which it was advertised. Furthermore, the seller, and not the buyer, enters into an agreement with the shipping company for the service of delivering your package safely. Since the seller pays the shipping company for this service directly, the seller must handle any issues that come up. If no insurance was purchased, that's the seller's loss. You, as a buyer, should cooperate fully in any claims filed for missing or damaged shipments, but you should not be out any money if the package is not delivered or arrives damaged.
SUMMARY
When you are thinking about making a purchase on eBay, the total cost is what most buyers think matters the most. If you feel as if you're getting a good deal, after adding together the price of the item, the shipping charge, and any insurance fees, that's all that counts, right? Well, yes and no. While that line of thinking is a good way to start, you also want to do everything you can to make sure you're dealing with a seller you can count on to deliver what s/he promises. An unreasonable or less-than-honest shipping insurance policy could mean trouble if problems come up after the sale. To be safe, you should ask yourself the following questions:
- Is the seller requiring me to purchase insurance, and, if so, are the shipping fees inflated?
- Is the seller trying to make a profit from insurance fees?
- Does the seller claim the responsibility for lost or damaged packages falls on the buyer?
If the answer to any of these questions is yes, you should consider finding another, more trustworthy and honest seller.
Copyright 01/17/2006, Affordable Med Supplies, Inc. All rights reserved. The contents of this work shall not be used, in whole or in part, without the express written permission of Affordable Med Supplies, Inc.
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