Postal/shipping insurance

Started by woodbury22uk, December 23, 2018, 10:41:41 AM

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woodbury22uk

Prompted by an Ebay discussion over on the Facebook Group I have been thinking about postal insurance.

If I sell something to somebody for £100 and ship it to them insured, what is the correct insurance value? If the item goes missing and I have to refund the buyer £100, I still do not have the item so the insurance needs to cover the cost of replacing the item that has gone missing as well, so the insurance value should be £200.

As the shipper I have taken charge of the item and not delivered it, and might be prepared to pay for the item I have lost, but probably not the cost to replace the item.


Interested in others thoughts.
Mike

Membre AFAN 0196

RailGooner

#1
 :hmmm: If buyer pays seller £100 for item X, then seller only needs to insure shipping for £100 (say £110 to cover P&P). Seller now has £90 (£100 payment from buyer less £10 payed to shipper). If shipper loses X, then seller receives £110 comp. Seller now has £200 (£100 to refund to buyer, and £100 to fund a replacement if desired).

Seller is happy now - rid of X and with £100 cash.

Buyer is mildly disappointed - doesn't have X but at least hasn't lost any money.

Shipper likely isn't bothered.

acko22

Err this is an interesting conundrum, to my understanding I thought you could only cover to the actual value of the item!

But your thinking is valid, as you have to refund the person who has purchased it and you are out of pocket so in effect double the money out of pocket!

Honestly if the powers that be say no and you can only insure up to the value of the item, say in this case a model i would just put it down as double the value and then if it did go missing and they try to get clever then just tell them it was weathered, super detailed etc.
Mechanical issues can be solved with a hammer and electrical problems can be solved with a screw driver. Beyond that it's verbal abuse which makes trains work!!

PLD

Quote from: woodbury22uk on December 23, 2018, 10:41:41 AM
If I sell something to somebody for £100 and ship it to them insured, what is the correct insurance value? If the item goes missing and I have to refund the buyer £100, I still do not have the item so the insurance needs to cover the cost of replacing the item that has gone missing as well, so the insurance value should be £200.

Erm no... ... ...  :hmmm:

You are forgetting the £100 the purchaser has paid to you. It is that you are giving (back) to the buyer not the insurance money which covers your loss of the item...
Think about it step by step:

If all goes to plan:

¦You¦Buyer
-------------------------------------------------------------------------------------------------------
1¦Buyer pays you £100¦+£100 ¦-£100
2¦You Post Item to Buyer¦+£100 & - 1 Item¦-£100
3¦Buyer receives Item¦+£100 & - 1 Item¦-£100 & + 1 Item


If Item is lost in the Post:

¦You¦Buyer
-------------------------------------------------------------------------------------------------------
1¦Buyer pays you £100¦+£100 ¦-£100
2¦You Post Item to Buyer¦+£100 & - 1 Item¦-£100
3¦Item is lost in the Post¦+£100 & - 1 Item¦-£100
4¦You refund Buyer £100¦+£0 & - 1 Item¦£0
5¦You claim £100 insurance from carrier¦+£100 & - 1 Item¦£0


Trainfish

#4
If you refund what you have received then you are back to zero balance. You then need to claim £100 to compensate for the item which you previously owned and tried to sell.
This doesn't take into account packaging and postal costs of course but I just thought I would simplify it. The key word here is refund as you have already received that money.



Edit: seems PLD just beat me to it by highlighting the refund part
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woodbury22uk

Thanks to everyone for clarifying this for me.
Mike

Membre AFAN 0196

MJKERR

#6
Which courier is providing the insurance?

I always go by the replacement cost, not the sales value

Earlier this year one of my Royal Mail Special delivery items went missing
This was sold on eBay UK for £650, and I had this insured for £750
Royal Mail wanted proof of value, so included both the eBay Order and quotes for re-purchase and re-postage, which came to £746
Royal Mail initially only wanted to pay the sales value of £650, but when I pointed out I had purchase a replacement they agreed to the £746

In terms of eBay UK (and this would apply to any sale) the buyer was given a full refund

Two months later the buyer advised the parcel arrived!

Webbo

It seems odd to me that a seller would want to replace an item they'd just sold on EBay.

I agree with the principle that one would want to cover insurance costs, postage, and item payment in assessing the insured value of an item and I suppose if you can insure it for more than this, you come out ahead with a lost sale. Another benefit of losing an insured parcel is that the seller is not subject to EBay and PayPal fees if a refund is issued to the buyer.

Insurance benefits the seller not the buyer, but many sellers like to give the impression that things are the other way round. As a seller I do not insure anything as it doesn't make sense to me to spend 10% of an item's value to cover against less than a 1% chance of loss.

Webbo 

njee20

Agree with Webbo - insurance is basically gambling, you have to weigh up the chance of a loss with the cost of the premiums. This is the case for any insurance. I personally don't insure parcels below about £200, because it would cost an extra £4 to send each one, and my experience is not that 1:50 go missing. Indeed it's never happened (touch wood).

The sole beneficiary of the insurance is the seller, unless the buyer is unscrupulous.

Bealman

If I jump on plane to fly from Sydney to Hobart, I don't even insure meself!   ;)
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MJKERR

Quote from: njee20 on December 24, 2018, 07:43:20 AM
I personally don't insure parcels below about £200, because it would cost an extra £4 to send each one
Varies by size and dimension
Basic insurance starts at £1.20, insured up to £50
Anything over £50 is insured up to £500, starts at £5.20 but the difference reduces with size and weight

In terms of value, the Royal Mail Terms compensate for the market value and on Special Delivery for replacement value

Some of the items I post are documents
Royal Mail Large Letter Second Class Signed for costs £1.89
However replacing that document would cost more than the £50 compensation, so are sent Special Delivery at £6.50
In some cases the documents must arrive before 09:00 the next day, costing £10.80
Twice the letter arrived between 09:30 and 10:30, so a full refund was processed plus the compensation

njee20

I was talking about railway stuff specifically, where basically everything N gauge is a small parcel, and is £3.95 for 2nd class signed for (with £50 compensation), or Special Delivery is £7.30 upward, usually £8.60, with £500 compensation by default.

Technically everything beyond a couple of wagons should have enhanced compensation if you want to ensure you're covered, but I don't bother.


Yet_Another

Its a racket.

The shipping company is saying: 'pay us some money, and if we lose or break your parcel, we might compensate you'

Eh?

Oh, and in the case of international shipping, the Royal Mail's insurance only covers you while your parcel is in the UK.
Tony

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