Declared Value vs. Shipping Insurance: What’s the Difference

Declared value is one of the key features that affect shipping costs and the insurance coverage you need. Any business owner who regularly delivers packages to clients needs to understand the differences between these shipping terms in order to run a successful business operation.

And the first thing to remember is that declared value is not shipping insurance, as they are often confused. Plenty of shippers only realize the difference after something goes wrong. So, let’s sort out the difference before your shipment ever leaves your hands.

What Is Declared Value?

The declared value of a shipment is the worth of a package according to the shipper. Often, it is not the same as the customs value. Your stated declared value should be as accurate as possible.

For personal senders, the declared value should be the cost at which the item/items were purchased. For businesses that are sending packages to their clients, the declared value should be the cost at which you intend to sell the item/items.

This is what ensures proper coverage if something goes wrong.

What Is the Purpose of Declared Value?

Couriers use the declared value shipping amount when calculating rates - the higher the value, the higher the cost, especially when package weight, package type, or service type also come into play.

Declared value also sets the maximum you can recover under a carrier’s basic coverage if the package is lost or damaged.

For customs, declared value is used to calculate duties and taxes. If the amount seems too low, your shipment can be held until you provide proof of purchase. This is even more important when goods face shipping restrictions or involve hazardous materials.

In short, declared value has a direct impact on cost, customs clearance, and compensation - which makes it especially important when you’re shipping valuable items, like artwork or jewelry.

Customs Value vs. Declared Value

The declared value is what you declare your shipment to be worth, while customs value is what a customs officer determines your shipment is worth (often based on your declared value). These two values should be the same. As we have mentioned previously, if they are not, you will pay more in taxes, get your package held, or even be held liable.

What Is Shipping Insurance?

While declared value affects a carrier's liability, it is not the same as insurance. Shipping insurance is a separate insurance arrangement that provides coverage for losses beyond the declared value.

Here's what to keep in mind:

• It can be purchased directly from the carrier or through third-party providers.
• Policies may vary by type of coverage and the entire shipment may be included, depending on terms.
• Claims usually require a claim form and proof of damage before they are processed.

The main benefit of shipping insurance is that it protects against more risks than declared value. An insurance agent can also help you compare shipping insurance rates, explain the cost of shipping insurance, and ensure you have the proper coverage.

This sets the stage for understanding shipping insurance vs declared value, as they operate differently in practice.

When Should You Use Shipping Insurance?

Shipping insurance is most useful when you’re sending high-value or fragile items that would be expensive or difficult to replace. Electronics, jewelry, antiques, glassware, and artwork are all common examples.

It’s also a smart choice for international shipments, where risks like theft, handling errors, or customs delays are higher. Even for domestic deliveries, if the shipment carries significant value, relying only on declared value often won’t be enough. Insurance helps fill that gap and ensures your business isn’t left exposed.

How Much Does Shipping Insurance Cost?

The cost of shipping insurance depends on the shipment’s declared value, package weight, destination, and chosen service type. For most small parcels, insurance through major carriers starts at just a few dollars for packages under $100.

As the value increases, the cost scales - for example, insuring a package worth $1,000 might add around $10 - $15.

Third-party providers sometimes offer lower rates, often charging between 0.5% and 2% of the item’s value. For larger freight shipments, premiums are typically lower as a percentage, but still influenced by the type of goods and route.

The Difference between Declared Value and Shipping Insurance

The declared value of your shipment increases the standard limits of liability of your shipping company for a higher shipping rate. However, carriers have a maximum declared value limit for which they are responsible, which is often not enough to cover the value of expensive or fragile items.

While the declared value increases the limits of liability, it does not change the terms of the bill of lading. In other words, you would still need to prove that your carrier was responsible for the loss. For instance, you will not be able to recover your money if the cargo was lost or damaged due to natural disasters or war.

Shipping insurance, on the other hand, can provide additional coverage for the full value of high-end items. Unless excluded, insurance allows you to make claims more quickly and without proving fault. In most cases, it is only necessary to show that the loss occurred and you have a valid basis for a claim.

How Do Major Carriers Use Declared Value?

Each carrier has its own rules, so it’s always best to confirm details directly with customer service. Still, many policies share the same basics:

• Default liability - If you don’t set a declared value, most major carriers assign a standard liability of around $100 per shipment. The exact amount can change based on the service type, package type, and destination.
   
• Not full insurance - Declared value only increases the maximum amount a carrier might pay if a package is lost or damaged. It does not replace shipping insurance, which offers broader protection and often a simpler claims process.
   
• Maximum limits - In many parcel services, the declared value limit can go up to $50,000, but this depends on the shipment details. High-risk or fragile items may not qualify for the maximum.

Because of these limits, relying on declared value alone can leave gaps in protection. For high-value shipments, pairing it with shipping insurance is usually the safer choice.

Should You Still Take Out Shipping Insurance?

If you are sending high-value items, the answer is yes. While declared value increases liability, only shipping insurance ensures coverage for losses without needing to prove fault.

Third-party insurance can also save you money on shipping insurance, offer broader protection, and make the claims process quicker.

Delivering Your Packages Safely and On Time

Unival Logistics provides end-to-end shipping solutions for high-value items. We will choose optimal routes so your packages arrive quickly and are handled by the fewest people possible, reducing the chance of error.

On top of that, you can get shipping insurance coverage of up to $150,000 at competitive rates. You can track your packages in real time with a tracking number. If you run an online business, you can integrate your store with our API for a streamlined shipping solution.

From start to finish, Unival takes care of your logistics needs, keeping your shipments protected at every step.