Understanding Shipment Value Protection
When you ship a package, you have options for protecting its value in case of loss, damage, or theft. The three main mechanisms are:
- Declared value coverage (carrier-provided)
- Cash on Delivery (COD)
- Third-party shipping insurance
Each works differently and carries different costs.
Declared Value Coverage
Declared value is a carrier service that increases the maximum liability the carrier assumes for a lost or damaged package. It’s not technically “insurance” — it’s a coverage extension.
Default Carrier Liability
Without declaring a value, both UPS and FedEx have a maximum liability of $100 per package. Any loss or damage exceeding $100 is unrecoverable unless you’ve declared a higher value.
Declared Value Rates (2026)
| Declared Value | UPS Rate | FedEx Rate |
|---|---|---|
| $0–$100 | Included | Included |
| $100.01–$300 | $3.45 | $3.50 |
| $300.01–$500 | $4.60 | $4.75 |
| $500.01–$1,000 | $6.90 | $7.00 |
| $1,000.01–$2,000 | $11.50 | $12.00 |
| Each additional $100 | $1.15 | $1.20 |
Important Limitations
- Both carriers cap declared value at $50,000 per package
- Certain items have lower maximum coverage (jewelry, electronics, art, antiques)
- Declared value does not cover consequential damages (lost sales, delays)
- Claims require proof of value (invoice, receipt, purchase order)
Cash on Delivery (COD)
COD is a service where the carrier collects payment from the recipient upon delivery. It’s primarily used in B2B transactions and specific industries.
2026 COD Rates
| Carrier | COD Fee | Maximum COD Amount |
|---|---|---|
| UPS | $14.50 per package | $50,000 |
| FedEx | $14.75 per package | $50,000 |
COD Payment Options
- Cashier’s check, money order, or certified check: Required for amounts over $999.99
- Personal/company check: Accepted for amounts up to $999.99
- Cash: UPS accepts; FedEx does not
COD is declining in usage as electronic payment methods become more prevalent, but it remains important in construction, wholesale, and certain manufacturing sectors.
Third-Party Shipping Insurance
Third-party insurance providers offer an alternative to carrier declared value coverage. These services are typically 40–60% cheaper than carrier declared value:
| Provider | Typical Rate (per $100 of value) | Key Features |
|---|---|---|
| Shipsurance | $0.50–$0.80 | Integrated with most platforms |
| Route | $0.60–$1.00 | Customer-facing; covers all issues |
| InsureShip | $0.45–$0.75 | Volume discounts available |
| Carrier declared value | $1.00–$1.20 | Simplest but most expensive |
Advantages of Third-Party Insurance
- Lower cost: 40–60% less per $100 of coverage
- Faster claims: Most third-party providers resolve claims in 3–5 days vs. 8–15 days for carriers
- Broader coverage: Some cover customer-reported issues that carriers deny
- Volume pricing: Rates decrease with higher shipping volume
When to Use Carrier Declared Value
- Low volume: Not worth setting up a third-party provider
- Very high-value items: Carrier coverage may be simpler for items over $5,000
- International shipments: Third-party coverage varies by destination
How to Decide What to Insure
Not every package needs extra protection. Use this framework:
| Item Value | Risk Profile | Recommendation |
|---|---|---|
| Under $100 | Any | Default liability is sufficient |
| $100–$500 | Low fragility | Third-party insurance |
| $100–$500 | Fragile | Third-party insurance + proper packaging |
| $500–$2,000 | Any | Third-party insurance (significant savings vs. carrier) |
| Over $2,000 | Any | Carrier declared value or specialty insurer |
The Bottom Line
Default carrier liability covers only $100 per package — far below the value of most products worth insuring. For most shippers, third-party insurance offers the best combination of cost, coverage, and claims experience. If you’re currently using carrier declared value, switching to a third-party provider can cut your coverage costs by 40–60% with equal or better service.
Want to see your current declared value spend? Upload one invoice to ShipMint’s Instant Analysis for a surcharge-by-surcharge breakdown — free.