By using a third-party provider, your company will experience immediate cost reductions within a month of starting.
For many companies, parcel insurance is not an area often discussed during contract negotiations with parcel carriers. However, insurance costs are prime shipping expenses your company should be looking to reduce. If you review your carrier agreement, you will see that declared value is not discounted, nor usually mentioned. Carriers enjoy significant profits on parcel insurance, while their customers are consumed with the task of filing and following up on claims. It is your option to move your insurance to a third-party provider that will reduce your costs and expedite claims.
Third-party parcel insurance has been around for over 50 years. There are several companies who specialize in third-party insurance for shipments with UPS, FedEx, USPS, DHL, Airborne and LTLs.
Below are the core differences between carrier coverage and third- party providers:
1. Rates
Carriers charge a much higher rate than third-party providers who offer reduced rates from 50% to 85% off of the carriers rates. Rates are dependent on volume and claims history. Without start-up costs or equipment to purchase, these programs can quickly reduce monthly shipping expenses.
2. Claims Process
Historically, processing a claim with a carrier has been a time-consuming task. Automatic denials for incorrect packaging as well as delays due to mandatory inspection of damaged merchandise are just a few of the many problems that can prevent your company from obtaining compensation for damage or loss. Third-party providers guarantee claims payment within 10 working days from receipt of the claim paperwork. As you know, carriers (other than USPS) provide you with $100 worth of coverage on every package. If you are not buying excess declared value from the carrier, your $100 claims are handled regionally and usually processed quickly without the common delays mentioned above. Third-party providers piggy-back carrier coverage, meaning once you have your $100 claim settlement from the carrier, you simply fax in your claim form with a copy of the check to the third-party provider. The remaining amount of your claim is paid within 10 working days.
Postal insurance is bogged down in paperwork and priced completely out of the market as the example shows. Claims are filed at individual post offices, and the wait on payment varies. In addition, your consignee is required to fill out a USPS claim form in order to complete the claim process. Third-party providers cover the entire value of the package so you have no dealings with the U.S. Postal Service when you have a claim. If you use the U.S. Postal Service to ship your product, discuss parcel insurance with your account representative. He will refer you to third-party provider companies.
3. Management
Management of parcel insurance through your carrier is a simple process. Simply declare a value in the insurance field of the carrier system or shipping software you are using. Your insurance premiums are outlined on your weekly carrier bill. Third-party providers offer a variety of programs to keep track of your insured shipments. The majority will have you key the declared value in a reference field on carrier systems. That data is electronically extracted at month end. The keystrokes remain the same. If you are using any of the popular shipping software programs such as Kewill, Pitney Bowes, HarveySoft, Windowbook or Endicia, these systems all have a field for alternate insurance. Insurance reports are printed at month end and premiums remitted once a month.
Third-party providers also insure inbound, international shipments and LTLs. Some third-party providers offer you on-time carrier monitoring as well as claims analysis. There are no start-up or monthly fees associated with third-party programs, nor is there any equipment to purchase. All third-party providers should be backed with underwriters with ratings of A or better, details of which you would receive on your policy.
By using a third-party provider, your company will experience immediate cost reductions within a month of starting. You can easily reduce your shipping expense by several hundred, if not thousands of dollars every month.
The bottom line is, if your company is looking for a way to reduce shipping costs, contact a third-party insurance provider today.
For more information on Universal Parcel Insurance Company (U-PIC), call 800-955-4623 or e-mail sales@u-pic.com.
