Refund the shipping protection fee when an order is cancelled before it ships: nothing travelled, so nothing was protected. Once the order has shipped and arrived, most stores keep the fee even if the customer later returns the items, because the cover applied to the delivery and the delivery happened. Whatever you decide, put it in your policy and apply it consistently.
For how the fee works in general, see the shipping protection guide and what is a shipping protection fee.
Why does this question come up so often?
Customers see protection as a separate line item, so when they cancel or return, they ask about it specifically. Support teams answer differently from day to day unless there is a written rule. A clear rule saves time and avoids the impression that the fee is hard to get back.
When should you refund the fee?
| Situation | Typical approach |
|---|---|
| Cancelled before shipping | Refund the fee in full |
| Partly cancelled before shipping | Keep it for the shipped items; adjust if priced as a percentage |
| Shipped and delivered, then returned | Keep the fee: the delivery was covered |
| Lost or damaged and claimed | Resolve the claim; the fee is not refunded on top |
| Exchange | Keep the original fee; decide whether the replacement shipment is covered |
| Refused delivery or returned to sender | Your choice; many stores keep it because the parcel travelled |
These are common approaches, not legal rules. Consumer rules in some places may require refunds in specific cases, so check those where you sell.
Why keep the fee on returns?
Protection covers the trip to the customer. If the order arrived safely, the cover did its job, much like paid shipping that is not refunded on a return. Refunding it would mean you cover every delivery for free whenever a customer changes their mind, which weakens the fund you pay claims from.
What should your policy say?
Add two or three lines to your protection or refund policy:
The shipping protection fee is refunded if your order is cancelled before it ships. Once your order has shipped, the fee is non-refundable, including on returns and exchanges, because it covers the delivery.
Link the policy next to the widget and in order emails. The claim policy generator builds the rest of the policy, such as filing windows and what counts as lost; add the fee wording above to it.
How do you process it on Shopify?
When you refund an order in Shopify admin, you choose which line items to refund. The protection fee is its own line item, so you can include it or leave it out. For cancellations before shipping, refund it with the rest of the order.
Payment processing fees on the original charge are usually not returned when you refund, so refunding the protection fee can cost a little more than the fee itself. Factor that into pricing.
What about auto-added protection?
If protection was pre-selected and the customer says they did not mean to add it, refunding the fee is the quickest way to keep trust, even after shipping. Make it easy to remove at checkout to avoid this. See opt-in vs auto-add shipping protection.
To set up protection as a separate line item, see Sam Shipping Protection.
Frequently asked questions
Should I refund shipping protection if an order is cancelled?
Yes, if it is cancelled before it ships. The parcel never travelled, so there was nothing to protect.
Is shipping protection refundable after delivery?
Most stores treat it as non-refundable once the order has been delivered, because the cover applied during transit. State this in your policy.
What about partial refunds or partial cancellations?
If some items are cancelled before shipping and the rest ship, keep the fee for the shipped part, or adjust it if you price protection as a percentage of the cart.
Part of our guide: Shipping protection →