Shopify has become the backbone of online selling for millions of businesses. More than 4.8 million businesses across 175 countries rely on Shopify to power their e-commerce stores. Its flexible storefront designs, deep app integrations, and powerful checkout features give you everything needed to sell faster and smarter. Add to that seamless payment options, marketing automation, and enterprise-grade scalability, and you have a platform that fits businesses at every stage of growth.
Selling on Shopify gives you control over your store, your brand, and your customer experience. Yet once an order leaves your warehouse, protecting it is your responsibility. Lost shipments, stolen packages, and damages during transit still cost you time and money.
Shopify stepped in to close that gap. In 2023, Shopify introduced its own Shipping Insurance feature, designed to give businesses a way to manage post-shipping risks directly inside the platform.
Now, you can protect your shipments, reclaim losses easily, and keep your customers happy without juggling third-party insurers. In this article, we will walk you through how Shopify Shipping Insurance works, what benefits it brings to your business, how you can set it up, and what it costs. We will also cover smart alternatives that can give you even more control over your shipping strategy.
What is Shopify Shipping Insurance?
Shopify Shipping Insurance is a built-in service that protects your orders against loss, damage, or theft during transit. It is powered by Shipsurance, a third-party insurance provider, but is fully integrated into your Shopify dashboard. You no longer have to juggle external insurance providers or worry about lengthy claims processes. Everything happens inside Shopify, where you already manage your orders.
Before Shopify introduced its own Shipping Insurance, businesses had two options.
- Absorb the costs of lost or damaged shipments
- or sign up for third-party shipping insurance providers.
Both methods added friction and extra work. That changed when Shopify rolled out an in-house solution that lets you protect your shipments with just a few clicks.
Read more: What is Shipping Insurance? A Complete Guide
How Shopify Provides Shipping Insurance
The feature is available when you purchase labels through Shopify Shipping. If you’re based in the United States and use Shopify Payments, you can access this insurance directly.
Depending on your plan, Shopify automatically includes some coverage at no extra cost. Additional coverage is optional and can be easily added at checkout when buying your shipping label.
How It Works?
- If your Shopify plan qualifies, your shipments automatically get up to $200 coverage.
- You can buy additional coverage up to $5,000 per package.
- Insurance fees are applied when purchasing the shipping label.
- If an issue arises, you can file a claim directly in your Shopify Admin within 120 days.
- Once you submit a claim, Shopify’s insurance partner, Shipsurance, processes it without you needing to leave the platform.
What Does Shopify Shipping Insurance Cover?
- Lost packages during transit
- Damaged shipments on arrival
- Theft after successful delivery (porch piracy)
Note: Some exclusions apply, such as uninsured shipping methods like USPS First-Class Mail.
Who Can Benefit From Shopify Shipping Insurance?
To benefit from Shopify Shipping insurance:
- You must be based in the United States.
- You need to use Shopify Payments.
- You must be on the Shopify Grow, Advanced, or Plus plans.
Benefits of Shopify Shipping Insurance
Shipping has always been a high-risk area for online businesses. One lost package can mean a refund, a lost customer, and a dent in your brand’s credibility. Shopify Shipping Insurance changes that dynamic. It gives your business protection without pulling you into complicated, third-party processes.
Let’s take a look at the benefits your business will experience once you add this feature.
1. Simplifies Post-Shipment Risk Management
Managing fulfillment risks typically involves coordinating with carriers, documenting claims, and waiting weeks for resolution. Shopify Shipping Insurance brings these post-shipment risk management tasks inside your platform.
You can initiate and track claims directly from the Shopify Admin without switching systems. This improves operational efficiency and shortens the claims lifecycle, giving you faster visibility into loss recoveries.
2. Strengthens Financial Planning
Uninsured shipping losses create unpredictable gaps in cash flow. Every unclaimed, lost, or damaged order eats into your margins without warning. By using Shopify Shipping Insurance, you add predictability to your shipping cost structures.
Insurance costs are based on clear rates: $0.89 per $100 for domestic shipments and $1.29 per $100 for international shipments, which helps you forecast expenses and allocate funds with better precision.
3. Enhances Customer Retention Efforts
Customers expect resolution when something goes wrong with their orders. Delays in refunds or replacements can erode loyalty quickly. Shopify Shipping Insurance supports faster resolution timelines because the claims process is linked directly to order management.
You can handle customer complaints without external dependencies, improving post-purchase experiences and strengthening your customer lifetime value (CLV) strategies.
4. Reduces Administrative Overhead
Before built-in insurance options, businesses had to juggle multiple vendor accounts, maintain separate insurance records, and manually reconcile claim outcomes with sales data.
Shopify Shipping Insurance reduces administrative load by consolidating insurance actions into the fulfillment workflow. That means fewer manual touchpoints, lower chances of error, and more bandwidth for your team to focus on growth tasks.
5. Offers Adaptive Coverage Options
Every business handles a mix of high-value and standard orders. Shopify Shipping Insurance allows you to adapt coverage based on shipment value. You automatically receive up to $200 insurance on eligible plans, with the ability to purchase additional coverage up to $5,000 per shipment.
How to Add Shipping Insurance on Shopify
Shipping insurance in your Shopify store strengthens your post-purchase operations. Here’s how you can enable and manage shipping insurance directly through your Shopify Admin:
Step 1: Start by logging into your Shopify Admin and navigate to the Orders section.
Step 2: When fulfilling an order, click Create Shipping Label.
Step 3: Under the shipping label options, you will see a section called Insurance. If you are eligible, Shopify will show any included insurance (up to $200) and offer the option to purchase additional coverage.
Step 4: Enter the declared value for the shipment. This is what determines how much additional insurance you need to purchase, if any.
Step 5: Review the insurance cost and confirm it along with the label purchase.
Step 6: Complete the checkout process for your shipping label. The insurance will be automatically tied to that shipment.
Shopify Shipping Insurance Cost
When you plan your shipping strategy, factoring in insurance costs upfront helps you avoid unpleasant surprises. Shopify Shipping Insurance follows a clear and predictable pricing model, which makes budgeting easier for your business.
Here’s what you need to know about the pricing structure:
- Domestic Shipments (within the U.S.): $0.89 per $100 of insured value.
- International Shipments (outside the U.S.): $1.29 per $100 of insured value.
If you are on Shopify’s Grow, Advanced, or Plus plans and use Shopify Payments, your eligible shipments automatically come with up to $200 in included coverage. You only pay additional fees when you choose to increase the coverage beyond the included amount.
Since the insurance cost ties directly to the shipment value, you can selectively purchase extra coverage based on the actual risk each order carries, keeping your fulfillment costs efficient and under control.
Best Practices for Using Shopify Shipping Insurance
Shipping disruptions are inevitable, but how you prepare and respond can make the difference between a small hiccup and a major business loss. You can maximize your Shopify insurance coverage, reduce downtime, and protect your margins more effectively by applying a few practical best practices.
1. Set Up Claims Automation Wherever Possible
Manually tracking lost or delayed shipments slows down your fulfillment team. Consider using apps or systems that monitor shipment statuses automatically.
Shopify’s native tracking, combined with basic order management workflows, lets you flag potential issues early. For businesses shipping high volumes, investing in automation tools like LateShipment.com can help you spot claim-eligible shipments faster and initiate claims without delay.
2. File Claims Within the Required Timeframe
Insurance claims come with strict timelines. For Shopify Shipping Insurance, you must file a claim within 120 days of the shipment date. Missing this window usually means losing any reimbursement.
To avoid this, set up internal reminders or SOPs (Standard Operating Procedures) for tracking deliveries, reviewing delivery exceptions, and initiating claims immediately after issues arise.
3. Use Third-Party Coverage for Special Cases
Shopify Shipping Insurance covers most standard risks, but it’s smart to layer additional protection for high-value or sensitive shipments.
Reliable providers like LateShipment.com offers standalone shipping insurance that can cover gaps or exclusions that Shopify’s insurance may not address. This dual coverage approach creates a stronger risk management net without adding major complexity to your operations.
4. Adjust Coverage Dynamically Based on Shipment Value
Not every package needs maximum coverage. Review your average order value (AOV) and product type before purchasing extra insurance. Use included coverage for lower-value shipments and selectively buy additional insurance for high-ticket orders. This keeps your insurance costs proportional and improves overall shipping profit margins.
5. Educate Your Customer Service Team
Your customer support team often becomes the first point of contact when a shipment issue occurs. Train them to understand how Shopify Shipping Insurance works, what documents are needed for claims, and typical resolution timelines.
Alternatives to Shopify Shipping Insurance
Shopify Shipping Insurance offers strong built-in protection for most businesses, but it isn’t the only option available. Depending on your fulfillment model, shipment volume, and customer base, you might want more flexibility or broader coverage.
Let’s look at reliable alternatives that can complement or replace Shopify’s insurance.
1. Carrier Insurance (UPS, FedEx, USPS)
Major carriers like UPS and FedEx offer basic shipping insurance when you buy their labels. Coverage terms vary by carrier, and while carrier insurance works for occasional shipments, claim processes can be slower and more rigid. It’s a good fallback for businesses shipping directly through carrier accounts rather than Shopify Shipping.
2. Private Shipping Insurance Providers
Companies like Shipsurance and Parcel Insurance Plan offer separate shipping insurance policies. These providers typically allow you to cover all shipments across different carriers under one plan. Private insurance can offer lower rates and more customized terms, but it requires separate setup and management outside of your Shopify workflow.
3. Building a Self-Insurance Reserve
Some larger e-commerce businesses create a self-insurance model, setting aside a fixed percentage of revenue into a reserve fund. This method gives you full control over claim decisions but introduces financial risk if loss volumes spike unexpectedly. It requires careful forecasting and disciplined accounting practices.
4. LateShipment.com Shipping Insurance
LateShipment.com offers an integrated shipping insurance solution that pairs well with fulfillment automation. This insurance protects shipments across multiple carriers, not just those booked through Shopify Shipping.
You can bundle LateShipment’s insurance with the platform’s delivery experience management tools to track performance and recover losses faster. It’s a strong option if you’re looking for expanded coverage beyond Shopify’s built-in offering.
Protect Your Parcels Better with LateShipment.com
Shopify Shipping Insurance offers dependable protection for lost, damaged, or stolen shipments. It can help reduce order refund costs, improve delivery reliability, and protect customer satisfaction scores. Still, coverage limitations, claim timelines, and lack of customer-facing options can create gaps, especially if you scale quickly or use multiple carriers.
That’s where LateShipment.com comes in. Along with comprehensive shipping insurance across major carriers, it gives you tools to automate tracking, proactively resolve delivery issues, and build custom-branded order tracking pages, all from one dashboard.
LateShipment.com is a complete post-purchase experience management platform. It integrates seamlessly with your tech stack, works across multiple carriers, and uses AI to flag risk in real time. Over 300 million shipments have been tracked using LateShipment.com, helping businesses reduce customer complaints and reclaim thousands in lost revenue.
Want to protect more shipments without adding more complexity? Book a demo with LateShipment.com and see how it fits into your fulfillment strategy.
