The owner of a small vending machine company recently learned the limitations to buying shipping insurance from UPS—and he's angry.
Jerry Emery of Elyria, Ohio routinely ships his vending machines to customers across the country. One of his machines was badly damaged recently en route to a customer. UPS returned the damaged machine and denied his $2,000 shipping insurance claim, saying the machine wasn’t packaged per UPS packaging guidelines.
"These big companies, they got everything in fine print, and most people don't read fine print because you're in a hurry," Emery told a Cleveland news station, NewsChannel5. "You're thinking you're buying insurance. You're not thinking that it's not going to cover this, and this and this. You think it's going to cover everything."
Emery tried to fight UPS’s decision to deny his claim by producing videos that showed how he packages his machines and what it would take to damage them during shipment, NewsChannel5 said. However UPS wouldn’t budge.
Emery’s situation is a good reminder to small businesses: Don’t assume that just because you buy shipping insurance that you’ll automatically be covered if something happens to your products while being shipped to customers. There have been numerous reports of other business owners who claim they were denied shipping insurance coverage—including a North Carolina man who says he lost $400 to $600 in product in 2011 when shipping some optic drives to California.
So, how can you protect your inventory when shipping?
- Know all the rules and limitations. A good first step is to read the shipment company’s insurance policy and claims process, including all the fine-print terms. Make sure to know the packaging rules as well, since packaging is often the reason claims are denied. Understand that shipping insurance policies carry many exclusions, and breaking even one rule could disqualify an insurance claim.
- Understand how much coverage you receive automatically. Most major shipping companies, including the U.S. Postal Service, FedEx and UPS, provide automatic insurance coverage of up to $100. Insuring anything over that amount requires purchasing a shipping insurance policy.
- Keep lots of documentation. If you’re concerned about protecting a particular shipment, take photos that show how you packaged the items as proof, in case you need it when filing a claim. Also keep proof of an item’s value and any receipt or documentation that shows you bought shipping insurance.
- Act promptly. Most shipment companies require that customers file a claim on damaged items within 60 days of the shipment date, though you generally have longer to file a claim on lost shipments.
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