Package Insurance: Managing Shipping Risk in the Bookselling Business
by Renee Magriel Roberts
I've never been overly fond of the insurance business. Insurance is an ethereal, intangible commodity that frequently appears more connected to a state of mind than a real product. The insurance transaction is essentially a two-part gamble: the insurance company is gambling that collectively it will reap profits despite the certainty that bad events happen; you are gambling that if something bad happens you will have paid less into the insurance "product" than the loss that occurs. I know from the crazy profits made by insurance companies that their bet is better than mine, and yet I buy insurance that is mandated (like car and house insurance), essential (like health insurance) and optional (like package insurance). Despite my admitted anti-insurance bias, I find package insurance extremely useful in our bookselling enterprise.
Now, not every bookseller insures her shipments. I've run into many who do not insure parcels at all; their shipping is at the customer's risk. Some engage in what I would call "poor man's insurance"; they feel that shipping with a proof of putting something in the post office mail stream covers them (for example, saving a receipt for postage, using Delivery Confirmation, or getting the post office to date-stamp a copy of the manifest) in the sense that they are no longer responsible for the shipment if the customer claims it is lost.
The problem with this methodology is that it puts the transit risk for the value of purchase entirely on the customer - a burden which the customer may in fact be shouldering unknowingly if he hasn't read the fine print. And, there is an added assumption that if a customer claims she hasn't received a package it is either somebody else's fault (e.g. the postal system, which will take no ultimate fiscal responsibility for uninsured merchandise) or the customer is simply being dishonest.
We know that this ultimately does not work if the customer has purchased through a site like Amazon, which will essentially force the bookseller to make good unless tracking is used, or through a credit card which will refund the customer and take the funds directly from your bank account. Moreover, fighting with the customer is a losing proposition. The ill-will created is generally a major negative in future sales.
The problem is only exacerbated by overseas shipping. Since you are dealing with at least two postal systems, packages are often delayed and may occasionally be lost. I feel like I should visit my local house of worship, for example, whenever we post something to Italy, a country whose employees not only frequently strike but have been known to burn piles of letters and packages to demonstrate their dissatisfaction. Since overseas shipping appears to be more risky than domestic shipping, and is certainly more expensive, sellers may be very uncomfortable providing services to overseas customers. Moreover, even if one wants to purchase insurance from the United States post office, this is not available for many types of shipments, and it is expensive.