FedEx moves millions of packages every month. But unfortunately, not every shipment arrives at its delivery point in perfect shape. Along the way, packages are exposed to the elements, mishandling by employees, mistaken shipping labels, or even theft.

For that reason, FedEx and other shipping carriers offer declared value coverage for the parcels they move. Carriers are very careful to say that this is not insurance coverage — it only applies if the carrier was responsible and the shipper can prove it. And it sets FedEx’s maximum liability at $100 unless the shipper says the delivery is worth more and purchases coverage to match.

Still, declared value coverage is the closest thing FedEx offers to a parcel insurance plan. Understanding how it works is essential to making sure you have the coverage you need — and no more than that.

How Does Shipping Insurance Work?

Most third-party shipping carriers include declared value coverage in their shipping contracts. Declared value coverage sets the maximum dollar amount that the carrier will pay the shipper if they are liable for lost or damaged packages.

FedEx, like most major carriers, includes $100 of declared value coverage in its contracts. Shippers can purchase additional coverage, based on the value of the item being shipped, for a per-package fee.

Shippers should note, however, that declared value coverage is not the same thing as insurance. Declared value sets a carrier’s maximum liability claim for any loss or damage that may occur to a parcel. If shippers purchase additional coverage, it increases carriers’ financial liability. That allows shippers to recover more of their costs — as long as shippers can provide proof of value and proof of loss, and as long as FedEx was responsible for the damage. Declared value coverage only applies while a package is in FedEx custody, not door to door.

Read More: Everything You Need to Know About Parcel Audits

What is FedEx Insurance?

FedEx offers standard declared value coverage. If the company is responsible for a parcel being lost, stolen or damaged, the shipper can file a claim to recover up to $100 in value.

If you’re sending something worth more than $100, you can purchase additional coverage by declaring the value of your parcel. Then, the following rates apply:

  • FedEx Ground charges $1 for every $100 of declared value for shipments worth more than $300.
  • FedEx U.S. Express charges $3 for coverage of shipments with declared values between $100 and $300. Over $300, coverage is $1 for every additional $100 in value.
  • FedEx International Express charges $1 for every $100 of declared value above $100. (Coverage of a package with a declared value of $250 would cost $2).

If you declare the value of a parcel and it is lost or damaged on its way to your customer, you’ll have to file a claim before FedEx will pay out the value of the parcel. The claims form requires proof of value, like a receipt for the purchase of the goods, as well as proof of loss, like an invoice showing that FedEx did indeed pick up the package.

FedEx Express claims must be filed within 60 days. FedEx Ground requires claims within 60 days if a shipment is lost and nine months if it is damaged.

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What Does FedEx Insurance Cover?

Declared value coverage offers shippers reimbursement if a parcel is damaged or lost while in FedEx custody. All packages are covered up to $100, but for packages worth more, shippers must declare the value and pay for additional coverage before the package ships. For parcels with declared value of $500 or more, FedEx requires a direct signature.

This type of coverage does not protect against “acts of God,” such as fires and natural disasters. Nor does it cover packages that are damaged or lost once they arrive on customers’ doorsteps. For that level of coverage, you’ll need a third-party insurance policy.

Read More: What is FedEx Smartpost?

How Long Does a FedEx Insurance Claim Take?

If claims are filed on time and with the required documentation, FedEx says they are usually resolved within five to seven business days.

What’s the Maximum Insurance You Can Get for FedEx?

The maximum declared value for most FedEx parcel services is $50,000. For FedEx SameDay, however, the limit is only $2,000.

FedEx places a $1,000 cap on the declared value of artwork, antiques, film and photography, glassware, furs, plasma screens, collector’s items such as coins, precious metals, stocks and bonds, musical instruments more than 20 years old, and scale models and prototypes.

FedEx offers Declared Value Advantage coverage to shippers moving high-value jewelry and precious stones and metals, which covers shipments worth up to $100,000. This coverage cannot be purchased for single items, however — it is only available to shippers who move these goods regularly.

FedEx vs. Other Shippers

FedEx and UPS offer very similar declared value coverage at very similar prices. In addition to declared value coverage, UPS offers true insurance coverage via UPS Capital, the arm of the company that deals with financial services.

The U.S. Postal Service offers insurance, not just declared value coverage, for its shipments. Priority Mail Express includes insurance for values of up to $100, and Priority Mail includes insurance for values of up to $50. However, its rates are much higher — fees start at $2.20 for values of up to $50 and climb to $9.35 for values between $500 and $600. Also, USPS sets its maximum coverage level at just $5,000.

FedEx does not offer insurance of any kind (as the company states in capital letters in its Service Guide). If shippers want insurance coverage for their deliveries, FedEx says, they should purchase it from someone else.

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