posted on March 6, 2002 08:46:42 PM new
I'm considering self insuring the items I ship. Until now, I haven't insured through the post office, but have a "guaranteed delivery" policy that I never charged for. What with online payment charges, the upcoming USPS rate increases, and the increases in eBay fees, that's just not feasible anymore.
I don't want to buy insurance through USPS because I think it's a rip-off. You have a long wait, forms to fill out, etc., and you can't be sure they'll approve the claim. Plus, I don't think they reimburse for shipping costs, only the item. Not sure about that. And upic (?) looks like it would be pretty time-consuming.
I'm thinking I can offer insurance as an option, at $1.00 per package, and self insure. When a claim is made, I would either replace the item or refund the total price including shipping. If they did not opt for insurance, I would not be responsible for post office screw ups.
Is this within the rules? If so, should I state up-front that I self-insure, or can I leave that unstated? I'm a little worried that if I don't state it upfront, the customer is going to wonder why they have a choice of replacement or reimbursement. OTOH, I hate to get in to a lot of explanations before there's even a problem. I don't want to invite claims, if you know what I mean.
Anyone have any experience with this? Advice is most welcome. Thanks in advance.
[ edited by dellastreet on Mar 6, 2002 08:48 PM ]
posted on March 6, 2002 08:57:09 PM new
Susposedly, and, depending on your state, there are some real hairy legal ramifications of selling insurance sans license!
PIC insurance involves about 5 minutes of work/month for me, as my ENDICIA LOG keeps a record for me -- just send it in at end of month!
Much easier to use than PO & it COVERS THE PRICE OF POSTAGE -- a huge PLUS for the very LOW COST ($0.40/$100.00 value, as I use FREE DC!)
I'm sure PERRY could give you better legal advice than I!
I don't use Endicia...just plain old fashioned stamps. I used stamps.com for a while, but I found it waaaay too cumbersome. I like using the priority labels, and there's just no way to print your own postage on those. I also don't use DC, too time consuming. That's why I want to offer my own insurance.
Perry hasn't practiced in years. I doubt he'd know any more than I do. If I ever decide to commit murder, though, I'll check with him.
posted on March 6, 2002 09:13:43 PM new
You can "self insure," but you cannot charge for it according to most, if not all, State laws. You need a license to "sell" insurance. The LAST thing you would want to do, if you did self insure, is ADVERTISE IT! You would have so many fraudulent claims you'd be out of business! Think about it.
Your best bet is what TOMWII suggested, get a policy with PIC. It's only $0.40 cents per $100 coverage. You can charge Postal rates or below, and either pass on the savings to your customers, our keep them as handling fees. It's 100% legal too. Something like $4.95 s/h/i would do the trick.
posted on March 7, 2002 04:47:30 AM new
I more or less self insure. But I would NEVER advertise that fact. If a customer writes and says the package didn't show after a 3-4 weeks I would do a refund. Haven't had to yet in 4-500 sales. I always give the customer a chance to buy insurance, perhaps a dozen in 3 yrs have done so. If the item is 20 bucks or more it gets PO insurance anyway.
posted on March 7, 2002 05:12:41 AM new
Just a curious thought, I have seen the comments about needing a license to 'sell' insurance. How many have complied with their states 'auction' license requirements?
Do you charge a handling fee or exact shipping? I charge just a few cents more than actual postage, not even enough to cover my shipping supplies. I'm thinking the $4.95 s/h/i is a good idea, but don't want to do it if it's against the law.
I did a Google search for self insured shipping last night. Lots of companies do it. I don't know if that means it's okay, or there's just a lot of companies breaking the law.
posted on March 7, 2002 05:58:54 AM new
Coonr, as far as I know, there aren't any states that require online sellers to get auction licenses. North Carolina and New Hampshire persued it back in 1999. The last I saw, North Carolina shelved the idea by saying it required "further research" and I haven't heard anything more about that since then. I don't know for certain if New Hampshire ever successfully managed to apply their auction license rules to online sellers. Judging from the lack of "buzz" about any state attempting to follow their lead (and there were many states eagerly waiting for somebody else to set the precedent), I doubt that New Hampshire was too successful either.
posted on March 7, 2002 05:59:25 AM new
Why don't you just state $1.00 for insurance, not mention "self-insurance."
The buyer doesn't care, and I don't believe that this kind of "insurance" falls under state licensure laws.
posted on March 7, 2002 07:56:16 AM new
If the customer asks for insurance and it's a cheap item (like $5) or so, then I self-guarantee the item. They pay $1.50 for this service. If the item is over $20 or so, then I go with U-PIC.
I never use the Post Office because never stand in line at the P.O.
posted on March 7, 2002 08:07:02 AM new
In order to avoid the complexities of self-insurance, simply bump up the cost of your shipping and handling charge and state that you guarantee delivery on all the items you ship.
We use Priority Mail with Delivery Confirmation and charge all of our buyers $5.00 for shipping and handling. Our actual costs runs just under $4.00 to ship a package and the extra dollar per order goes in a theoretical "kitty" that covers the cost of replacing lost or stolen pacakges.
The above has worked out well for us over the years. We are able to immediately replace lost or stolen items to the great satisfaction of our customers and are able to avoid the expensive, red tape ridden, time consuming, short changing beuracracy of Postal insurance.
posted on March 7, 2002 09:31:19 AM new
I rarely insure for less than about $40, but I do figure it in to my shipping total. Not the entire $1.10 amount, but I want to make a little on this to cover the occasional package that does get lost. I've had maybe about 10 packages under $40 that have gotten lost that I have had to replace, but this is out of thousands that I have sent over the past 8 years (I've been doing online auctions way before ebay was thought of) - I actually filed my first postal claim within the past couple of months, and I did get reimbursed for the postage costs. That is good, because I am about to file my second claim, a package to Europe that had a very high postage cost. I've thought about UPIC but they don't cover everything, and as I have said, I've had pretty good luck over the years. If that were to change, then I would look at other options...
posted on March 7, 2002 01:20:04 PM new
holdenrex,
I know. I also dont know of any state that is currently requiring a licences for anyone who 'insures' or guarantees their own packages safe arrival. It would be a different matter if you were 'insuring' someone elses package.
posted on March 7, 2002 02:15:11 PM new
I know it is against the majority practice, but we believe it is wrong to charge buyers for insurance. We are offended when a seller tries to charge us for insurance. We believe that it is the seller's responsibility to deliver the package. The buyer has no control over the quality of the packaging, which so often on eBay is poor and unprofessional, and they do not ship the package. Also, only the shipper can file an insurance claim with the PO. So our practice, and we advertise this prominently, is to guarantee safe delivery. Generally we buy insurance for anything worth more than $100, and self-insure for everything under that. No package of ours had ever been lost until recently when one disappeared after leaving our PO. We always use Delivery Confirmation, or UPS Ground, except on International shipments. We get tremendous feedback from our buyers.
posted on March 7, 2002 03:38:50 PM new
Again, and in my opinion, if you "charge" for insurance and self-insure, you are breaking the law. You need a license to sell insurance. This applies even if you are calling it "assurance, guaranteed delivery, or etc.;" it also applies if you state a fixed s/h/i fee and do not break down the costs. However, if you self-insure for FREE, you do not need a license.
This is acerbated today because buyers scrutinize what they paid you for shipping, versus the postage paid on the package. You WILL get inquiries regarding the perceived lack of insurance that was paid for. What will you tell your customers? What if they turn you in to your State's Insurance Commision? Do you really want to deal with the State?
I eMailed candi at U-Pic.com; she has posted here on the self-insurance subject before. Hopefully, she can come by and explain this out much better than me.
posted on March 7, 2002 04:25:18 PM new
morgantown, that's not correct. And while some (very few) compare the postage price with what they paid for shipping and handling, I NEVER use the POST OFFICE for insurance -- so the insurance fee won't appear on the package anyway.
posted on March 7, 2002 04:54:28 PM new
morgantown,
it also applies if you state a fixed s/h/i fee and do not break down the costs
I'm confused. When I order something from Coldwater Creek or Amazon.com (just examples), I don't recall seeing a breakdown when I check out. And I know most mail order companies charge waaaay more than actual postage charges. So, are you saying big companies can do it, but small ones can't? Or that big companies have a license to do it? What about the breakdown of costs?
Not trying to be difficult, just trying to understand.
posted on March 7, 2002 06:23:58 PM new
Insurance is a weird thing that only seems to come up with auction items. In an in-person auction, the title to the goods passes when the gavel strikes. Thus, it became the practice in the auction business if the goods had to be shipped for the buyer to pay for insurance. However, under the Uniform Commercial Code, in effect in all states, when a consumer buys something by mail order from a business, title to that item does not pass until it is delivered. Thus, there is no risk of loss in shipping to the buyer. Thus, insurance never is an issue for consumers buying by mail order, or at least it should not be. The law is different for business to business transactions, and for transactions between individuals. We contend that an on-line auction should follow the same practice as mail order, and that the responsibility for delivery should be the seller's. The law is unclear because it was enacted long before on-line auctions came into existence. In any case, we feel perfectly comfortable charging a flat fee for shipping. That fee is the same whether or not we buy insurance for our own protection.
posted on March 7, 2002 06:41:46 PM new
peiklk, it only takes one customer to compare what they paid for shipping vs. postage on the box. If they paid for insurance, ask for proof of insurance, and you cannot provide it, you are open to trouble.
dellastreet, I'd say that bid companies carry their own insurance policy, or factor normal loss with increased prices.
posted on March 7, 2002 06:55:28 PM new
Just to add a littly more confusion to this discussion, UPS automatically includes up to $100.00 of insurance to every package they deliver.
Is that insurance legally being offered by the seller of the item or by UPS?
The customer (buyer of the auction item) pays the seller who in turn pays UPS for the insurance.
posted on March 7, 2002 07:17:23 PM new
morgantown,
Thanks for your reply, but it doesn't quite answer my question. When I'm charged $8.95 s/h by Sears (example only) for an item that I know weighs less than a pound, there is no breakdown to show how much is shipping, how much is handling, and how much if any, is insurance. How much is factored in for labor? Do I even have the right to know the breakdown? I'm pretty sure if I asked, they wouldn't answer.
I know I can return the item to Sears if it's damaged in shipment and they will refund or replace. If it never arrives, they will send a replacement. They ship through USPS, yet there is no "Insured" stamp on the package. Soooo...are they insuring the package? Or are they guaranteeing shipment? In either case, why isn't it broken down on my invoice?
I'm really not trying to nit-pick, but this seems to be a legal issue. I've always seen online auctions as pretty much synonymous with mail order. The mail order companies I order from give me no explanation of charges, but they do apparantly guarantee safe delivery of their items. In what way are they different than me?
Sorry if I seem argumentative. I'm not...just obsessive compulsive. LOL
posted on March 7, 2002 07:37:57 PM new
Hi DellaStreet:
Sears is not insuring the package via the USPS; Sears does use delivery confirmation. They are self-insuring. It's part of their "Satisfaction Guaranteed Or Your Money Back" guarantee, which covers in store pick-up and mail order.
Sears is not going to break down the cost of their S/H, it's too complex. You see an item in the catalog, note the S/H, and buy it or not based upon the overall cost. It's truly a dichotomy that ebay sellers cannot sell by the same standards.
posted on March 7, 2002 08:09:42 PM new
So, if I charge 4.95 s/h as opposed to $3.95 s/h, I can guarantee my shipments but still not be a self insurer in a legal sense?
posted on March 7, 2002 08:18:32 PM new
If you do not specifically charge for insurance, but guarantee your shipments against loss or damage, you are OK.
