Why Owning the Claim Process Beats Outsourcing It to Insurance Providers

Control, speed, and trust matter more than passing the buck.

At first glance, third‑party shipping insurance seems risk‑free: no out‑of‑pocket costs and someone else handles the claims. But in reality, handing off this part of the customer experience often leads to delays, frustration, and lost trust—even when the merchant technically isn't at fault.

And in some cases, it quietly eats into your margin—not through direct cost, but through lost customers, support burden, and negative reviews.

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The Problem with “Zero-Risk” Insurance

Third-party insurance sounds like a safe bet. You don’t have to manage payouts, and risk is technically outsourced. But real-world experience often tells a different story.

According to a UPS Capital survey, 92% of merchants experienced loss, theft, or damage in the past year, and more than half said those issues cost them over $50,000 in business impact, over 40% of merchants see these issues in 2–5% of all shipments per quarter.

And what happens next is critical. Insurance claims often take 2–3 weeks to resolve, require photo evidence, police letter, shipping documents, and detailed forms. For the customer, that delay feels like inaction—and their frustration almost always points back at the store.

You may not be paying for the insurance itself—but you’re still paying the price in time, trust, and conversion loss.

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You Don’t Control the Experience—But Your Customer Thinks You Do

This is the part many merchants underestimate. Even if an insurance provider is fully responsible for the claims process, your customer doesn’t see it that way. They made the purchase in your store. They got the protection offer on your checkout page. And now they’re waiting—sometimes weeks—for a refund or resolution they expected from you.

This often results in:

• Negative reviews about poor support

• Increased tickets to your team for updates you can’t control

• Lost loyalty from an otherwise satisfied customer

And if your brand feels premium, responsive, and polished elsewhere, that disconnect becomes even more noticeable.

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Why More Merchants Are Choosing to Own the Process

Instead of outsourcing claims, many merchants now prefer to manage the experience directly. It means taking ownership of the process—but it also brings:

• Resolution on your terms — respond instantly, later, or not at all depending on your policy

• More trust-building moments, because customers feel heard

• A branded experience that matches your store, not someone else’s interface

• Flexibility — define your own rules for refunds, reshipments, or returns

Some brands even go further—using the same portal to manage returns, exchanges, or warranty flows, all under one consistent system.

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A Balanced Perspective

Third-party insurance isn’t inherently bad. It can be useful for high-value shipments or cases with unpredictable exposure. But when customer experience is the priority, especially post-purchase, owning the resolution process gives you speed, visibility, and flexibility—all things that matter more than passing the buck.

And while insurance shifts the cost of occasional claims, it may quietly reduce your overall profit—if it leads to churn, poor reviews, or increased support load.

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Final Thought

When problems happen after delivery, customers don’t want to hear “that’s up to our insurance partner.” They want fairness, clarity, and speed—from the brand they bought from.

Owning the claims process means you stay in control of the experience—and ultimately, the relationship.