Is shipping insurance worth it? The two-line math
Insurance is worth buying when the premium is smaller than your expected loss: loss-or-damage rate × what a loss actually costs you (product cost + outbound postage + reshipping or refunding). Two corrections before you buy anything: first, check what you already have — USPS Priority Mail International and Express include the first $200 of coverage at no charge, and payment disputes cover some delivery failures anyway; second, use YOUR loss rate from real shipments, not fear — for most routes it's well under 2%, which makes insurance on a $30 order (expected loss well under $1) a losing trade at almost any premium, while a $400 consignment on a lossy route flips the answer.
How to apply the rule without fooling yourself
Work per route, not per feeling: your loss rate to Germany via PMI is a different number than to a rural route via economy post — and FCPIS (the budget service) carries no included indemnity and a $400 content ceiling, so cheap postage is where self-insuring needs a real number behind it. Count the full loss too: a lost $60 order costs you the product cost, the postage you paid, and the reshipment or refund — often 1.5–2× the sticker price.
The self-insurance alternative is legitimate and often optimal: add the expected-loss amount (rate × loss cost) to your pricing as a reserve and skip per-parcel premiums. That's exactly the post-sale-loss line in the net margin calculator — insurance only beats the reserve when premiums are below your true expected loss, which mostly happens on high-value, lossy, or irreplaceable shipments.
Common questions
- Does insurance cover buyer claims that the parcel never arrived?
- Carrier insurance covers carrier loss/damage per its terms; a buyer chargeback is a separate machine with its own costs — the chargeback calculator prices that side.
- What about carrier liability for couriers?
- Couriers include limited declared-value liability and sell more; their published terms vary by contract, so verify your own rate card — this page only cites the USPS inclusions we verified.
Official sources behind these numbers
- International merchandise insurance fee schedule for PMEI and PMI: first $200 indemnity included at no charge; fees above; max $5,000 (varies by country). USPS · verified 2026-07-22 · effective 2026-07-12
- Maximum weight and value limits per international service. USPS · verified 2026-07-22 · effective 2026-07-12