Shipping insurance reimburses you when a parcel is lost or damaged in transit. You buy it per shipment (or get some included with your label), and if something goes wrong you file a claim with the insurer or carrier and wait to be paid. It protects your costs. It does not, on its own, fix the order for your customer.
That is the key difference from shipping protection, which is a fee your customer pays so your store can make the order right quickly. This guide covers what each one does on Shopify and when you need them.
What is shipping insurance?
Shipping insurance is coverage for the value of a package while a carrier has it. If the package is lost, stolen in transit or arrives damaged, the policy pays the insured value after you file a claim and provide evidence.
On Shopify you will meet three forms of it:
- Carrier liability and declared value: what UPS, FedEx and USPS accept for their own failures.
- Insurance on Shopify Shipping labels: coverage you add when you buy a label in your Shopify admin.
- Standalone shipping insurance: policies from insurers or shipping platforms that cover many shipments.
What do carriers cover by default?
Every major US carrier includes some coverage, but it is limited and it is not always insurance.
| Carrier | What is included | Is it insurance? |
|---|---|---|
| UPS | Liability up to $100 per package; declare a higher value for a fee | No. UPS says a declared value is not insurance. |
| FedEx | Liability up to $100 per package; declare a higher value for a fee | No. FedEx says it does not provide insurance of any kind. |
| USPS Ground Advantage | Up to $100 of insurance included | Yes, included insurance |
| USPS Priority Mail | Up to $100 of insurance included | Yes, included insurance |
USPS requires a tracking barcode for included insurance to apply, and you can buy more for higher-value items. With UPS and FedEx, you typically need to show the carrier was at fault, which is hard when a tracking scan says “delivered”.
Does Shopify include shipping insurance?
Yes, in some cases. According to Shopify’s Help Center:
- If you ship from the United States and buy labels in Shopify, you can add insurance of up to $5,000 per shipment.
- If you have Shopify Payments active and are on the Grow, Advanced or Plus plan, up to $200 of insurance is included on each eligible label at no extra cost.
- Extra coverage costs $0.89 per $100 for domestic shipments and $1.29 per $100 for international shipments.
- Shipsurance administers the coverage.
- You can file most claims from 24 hours after shipping up to 120 days from the shipping date, from the order page in your Shopify admin.
Some services are excluded. For example, Shopify lists USPS First Class Mail as not eligible. Check the Help Center for the current rules before you rely on it.
How is shipping insurance different from shipping protection?
They answer different questions. Insurance asks “who pays the merchant back?” Protection asks “how does the customer get their order fixed?”
| Shipping insurance | Shipping protection | |
|---|---|---|
| Who pays for it | Usually the merchant (or included with a label) | The customer, as an optional fee at checkout |
| Who gets paid | The merchant | The customer gets a refund, reship or store credit |
| Who handles the claim | The merchant files with the insurer or carrier | The store (self-funded) or the provider (provider-funded) |
| Speed for the customer | Slow if the customer waits on the claim | Fast: the store decides |
| Porch theft after “delivered” | Often excluded or hard to prove | Covered if your rules say so |
| Revenue | A cost | Self-funded: the fee is revenue |
Sam Shipping Protection is a shipping protection app, not insurance. It gives you the tools to run your own protection program: you set the fee, customers opt in, and you decide how to resolve each claim.
Do you need shipping insurance?
It depends on what you ship. Use this as a starting point:
| Your store | Shipping protection | Shipping insurance or declared value |
|---|---|---|
| Low-value orders (under about $100) | Yes, priced from your claim rate | Often optional: included carrier coverage may already match the value |
| Mid-value orders | Yes | Optional, for parcels above the carrier’s included amount |
| High-value items (jewelry, electronics) | Yes, priced by order value | Yes, to recover your replacement cost |
| International shipping | Yes, priced higher for long routes | Worth it for valuable parcels |
The “about $100” line comes from the default coverage most carriers include. Set your own threshold from your product costs, not your retail prices.
Can you use shipping insurance and shipping protection together?
Yes, and for many stores that is the best setup:
- Protection handles the customer. When a package goes missing, the customer files a claim through your portal and you reship or refund fast.
- Insurance or declared value handles your cost. For parcels that are worth it, you file a claim with the carrier or insurer to recover what you spent.
- The protection fee covers the rest. Small claims you would never file with an insurer are paid from the fees customers chose to pay.
This keeps the customer experience fast and still protects your margin on expensive orders. Use the shipping protection calculator to see whether your fees cover your expected claims.
How do you file a shipping insurance claim?
The details differ by provider, but the steps are similar:
- Wait for the right moment. Carriers and insurers often require a waiting period before a package counts as lost.
- Collect evidence. Tracking history, photos of damage and packaging, the invoice showing the item’s value, and any customer messages.
- File within the deadline. For Shopify Shipping insurance, that is up to 120 days from the shipping date.
- Keep damaged items and packaging until the claim is settled, in case the insurer asks to inspect them.
Meanwhile, do not make the customer wait. If you offer protection, resolve their claim first and recover your cost later.
What does shipping insurance usually not cover?
Read your policy, but these gaps are common:
- Packages marked “delivered” that the customer says they never received.
- Poor packaging that the insurer decides caused the damage.
- Excluded items or services, such as certain mail classes or restricted goods.
- Late claims filed after the deadline.
These gaps are where shipping protection helps most, because your own rules decide what is covered. For playbooks on lost, stolen and damaged orders, see our order protection guide. To set up protection on your store, see Sam Shipping Protection.
Frequently asked questions
Does Shopify include shipping insurance?
If you buy labels in Shopify from the US, have Shopify Payments active and are on the Grow, Advanced or Plus plan, Shopify includes up to $200 of shipping insurance on each eligible label. You can buy more, up to $5,000 per shipment. Shipsurance administers the coverage.
Is shipping insurance the same as shipping protection?
No. Shipping insurance reimburses the merchant after a claim with an insurer or carrier. Shipping protection is an optional fee the customer pays at checkout, and the store (or a provider) fixes the order with a refund, reship or store credit.
Do I need shipping insurance if I offer shipping protection?
Not always. Protection covers the customer promise; insurance covers your cost on a lost or damaged parcel. For low-value orders, protection fees priced from your claim rate can cover claims on their own. For high-value parcels, adding insurance or declared value lets you recover the cost of replacing them.
How long do I have to file a Shopify Shipping insurance claim?
According to Shopify's Help Center, you can file most claims from 24 hours after the order ships up to 120 days from the shipping date, from the order page in your Shopify admin.
Does carrier declared value count as insurance?
No. UPS and FedEx both state that declared value is not insurance. It raises the carrier's liability for its own failures above the default $100 limit, and you still have to show the carrier was at fault.