A package protection fee is a small, optional charge you see at checkout. If you pay it and your package is lost, arrives damaged or is stolen, the store makes it right with a refund, a replacement or store credit, under its published rules. For stores it is also a way to fund those fixes without eating into margin.
Merchants: for the full picture, see the package protection guide.
What does a package protection fee cover?
It covers what the store’s policy says, which is usually:
- Lost in transit: tracking stops and the package never arrives.
- Damaged on arrival: the item is broken when it arrives.
- Stolen after delivery: the package is taken from the doorstep.
Most policies set a filing window, ask for photos of damage, and exclude things like a wrong address entered by the customer or store pick-up orders.
How much is it?
Usually a small flat fee or a small percentage of the order. Many stores charge more on larger carts, using price bands or a percentage with a minimum and maximum. The right fee depends on the store’s own claim rate; see how much to charge for shipping protection.
Where does the money go?
| App model | Who keeps the fee | Who pays and decides claims |
|---|---|---|
| Self-funded | The store | The store |
| Provider-funded | The provider | The provider |
With a self-funded app, the fee becomes the store’s fund for fixing problem orders. Anything left over is revenue. With a provider-funded app, the fee pays the provider to handle claims.
Why do customers pay it?
- Peace of mind on expensive or hard-to-replace items.
- A fast fix without waiting for a carrier investigation.
- No argument about fault: lost, damaged or stolen, the store has already agreed what it will do.
- Porch theft, which carriers rarely cover once a package is scanned as delivered.
What happens when you file a claim?
- Find the store’s claims page or contact address, usually linked from the order email or footer.
- Enter your order number and email, and choose lost, damaged or stolen.
- Add evidence: photos of the item, box and label for damage; a note if tracking says delivered but nothing arrived.
- Wait for the reply within the time the policy states.
- Get your fix: a refund, a replacement or store credit, depending on the policy and stock.
Filing promptly, inside the policy’s window, makes the process much faster.
How should stores present the fee?
Show the price next to a clear toggle, say what it covers in one line, label it optional and make it one click to remove. Link your protection policy. That keeps the fee transparent under hidden-fee rules; see our guide to junk fee rules and shipping protection.
How does it show up on the order?
On Shopify, the fee appears as its own line item, because apps add it as a separate product. Stores usually rename it to something clear, such as “Order Protection”, and hide it from their catalog.
To offer package protection on your store and keep the fee, see Sam Shipping Protection.
Frequently asked questions
Is a package protection fee required?
It should not be. Package protection is an optional add-on: the customer can choose to pay it or remove it before checkout. If a fee is mandatory, it belongs in the product price, and several US states require that.
Where does the package protection fee go?
It depends on the app the store uses. With a self-funded app such as Sam, the fee goes to the store, which pays claims from it. With a provider-funded app, the provider keeps the fee and pays claims.
Can I get the package protection fee refunded?
That depends on the store's policy. Some stores refund it if you ask before the order ships; after delivery, the fee has already provided the cover you paid for.
Is package protection the same as insurance?
Not usually. It is a store's promise to fix your order under its published rules. Carrier insurance, by contrast, reimburses the shipper after a claim.
Part of our guide: Package protection →