Self Insuring

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Posted By: Lee Behrens

The question I pose is this: If you offer insurance at Postal Service rate, would it be wrong to keep the insurance money for yourself and self insure if there is a problem?

I have heard that USPS is a pain in the ash to try and collect on an insurance claim, so why not just collect the money for yourself instead of giving it to the post office?

Would you be made if you paid for insurance only to find out the seller kept the money? I believe this is the way grading companies handle insurance, they have their own policy since there is a limit on how much the carriers will insure for.

Just something I have pondered and would like some input.

Lee

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Posted By: Judge Dred

I would be disappointed if I had paid for insurance at the sellers request and the seller did not insure the item through the postal service. Someting else to consider is that if you are the seller you might seriously consider using the signature for package option if you are going to use some method of "self insurance". I would be up front about it to the buyer because they might not see this so clearly.

Typically the USPS is very reliable and they don't lose too many packages. My guess is that people would worry more about a damaged package. Usually damaged merchandise can be protected against with a little extra effort in the packaging process.

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Posted By: warshawlaw

to self insure as long as you disclose it. I also think that you are asking for trouble by doing it, esp. if you take paypal. What if some grifter claims he did not get the high-dollar card and goes after you? I'd prefer to pass the buck to the USPS.

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Posted By: Lee Behrens

Shipping would always involve either delivery confirmation or signiture confirmation.

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Posted By: Julie

If I had not insured it, she would have found out, because no insurance label on the package, and she probably would never have spoken to me again. The fear and trembling I lack for the Canadian government is reserved for friends, relatives and customers who believe they are receiving insured mail from me.

By the way, Lee, what are your favorite 19th century, T-card, E-card and misc. sets? Just curious...

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Posted By: Marc S.

use third-party insurance companies - the most prevalent seller of such is 4 Sharp Corners out of Massachusetts, who really only sells modern.

At any rate, though - it is presumably much cheapers than USPS. If you think about the USPS rate, it is basically 2.6% of insured value for the first $50 - and I've never had to make a claim having using that hundreds of times. Not to mention the countless hours spent in line. I think if you are upfront in your auction description (e.g. "Insurance is through a third-party agency, or I self-insure"), then you're okay. I just wouldn't charge people and then not do what they think you will do.

~ms

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Posted By: warshawlaw

Not all policies will cover cards sold to others. Some will cover you for occasional sales but not for a business. You need to check with your agent and get a written response to your inquiry (so they can be held liable for negligence if they misinform you). Your safest bet is likely to be business inventory insurance for the cards.

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Posted By: Chris

I think some people will always feel like you are getting over on them and some will not care as long as it is covered. Maybe give them the choice of insuring thru USPS or insuring thru you at a slightly lesser charge. You should still make enough to cover lost packages(fingers crossed. Remember, not everyone on Ebay is rational. I think you open yourself up to negative feedback and just plain old people getting upset. Even if you cover everything, there will still be some guy that gets p**ed off.

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Posted By: Gilbert Maines

I see no problem with this from a buyers viewpoint.

Gil

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Posted By: gdporter

Unfortunately, I think that many of the responses to this question are missing the point. All Sellers self-insure - or to put it another way, any reputable Seller recognizes that he/she needs to refund the purchase price to the Buyer if the product is never received by the Buyer or to compensate the Buyer if the product is damaged in transit. That is built into the purchase price and is, for better or worse, part of the risk of doing business by mail.

The Seller can mitigate these risks by selecting the manner of shipment and the manner of packaging - and passing these costs on to the Buyer (oftentimes with an undisclosed profit margin built in). For that matter, the Seller can specify that insurance is required (at the Buyer's expense) and that the sole rights of the Buyer are against the insurance company. It is, of course, also possible for the Seller to specify that he/she will not be responsible for lost packages or goods that are damaged in transit without insurance, but I for one would never deal with such a Seller unless the package was fully insured -- and in that case the Seller should insist on insurance anyways, since the disclaimer will have little practical effect unless the Seller can PROVE that he/she did mail the package correctly and that the goods were packaged in a responsible manner..

The point of purchasing insurance is the perceived security that an independent, financially-capable third-party will be present to resolve shipment disputes and make payments. We can debate whether insurance companies perform this meritorious service (I define insurance to my clients as "the business of accepting premiums for the privilege of denying coverage"), but that is not really the point. Insurance is not necessary when dealing with a reputable Seller, but is often purchased because the Seller is not known to the Buyer, or because of the perception that there will be a "fairer" hearing if the claim is pursued with an independent company, or because the Buyer believes that insured packages are handled with greater care by the carrier.

It is common practice for Sellers to "charge" for self-insurance, either by building that into the sales price or by building an additional cushion into the shipping price. (How often does this site have discussions about a Seller's shipping price being too high?) However, I think it is flatly wrong for a Seller to charge for insurance when none is purchased. There would, of course, be a different answer if - as is often the case for large companies - the Seller has purchased a master policy and makes that available to each Buyer for them to submit claims directly.

Ah well. So much for my efforts to make friends at this board. . . . . . . .

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Posted By: Judge Dred

An excerpt from the previous post:

"since the disclaimer will have little practical effect unless the Seller can PROVE that he/she did mail the package correctly and that the goods were packaged in a responsible manner.."

On my part I assumed that the seller was shipping via USPS. I know this is not always the case. I'd like to add something to proof of sending an item via the USPS.

I ship from a main post office and I always have the postal service weigh the item and calculate the shipping charge. I am provided with a receipt that has the zip code of the area to which the package was sent. To me, this would be sufficient proof that I sent something to that area. What are the odds of people knowing so many different people in all of the different zip codes. Also, the fact that the package was shipped on a certain date would probably add validity that I actually sent a package to a person in that zip code.

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Posted By: Lee Behrens

Mr. Porter, somewhat read my post properly. My whole question is why can't we as sellers collect the insurance money and pay them if there happens to be a problem?

Mr. Judge, Your theory on the receipt with the zip and date does not work for paypal, so beware if you are using them. But I do agree with you on the receipt thing, I always add delivery confirmation, but this only confirms when the item was receieved by the Postal service and then when the package is delivered. It does not track an item.

I was hoping to get so response in my other threads about previous shipping problems so we had an idea how they were handled but no responses, yet.

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Posted By: hankron

Not commenting specifically on Lee's issue. I've long felt it would be a reasonable and practical practice, for a seller who has had shipping or similar issues where he has had to eat the costs no fault of his own, to have a 'rainy day fund.' By tacking on a 25 or 50 cent cent extra charge (or whatever) to shipping, he would accrue money when that issue arrises. If, after 200 packages, one is lost or one is stolen, this fund would at least partially cover the cost. I wouldn't call this insurance, but an honest charge to cover the cost of doing business.

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Posted By: leon

I have on occasion charged for insurance and then not bought it ...knowing that if something happened I would gladly, promptly, pay for the product that was lost. I thought of it as insuring the packages myself. I really didn't think much of it till this post but guess I won't do it anymore. My thought was innocent in that I figured I would cover the loss and no one would be out....oh well....guess I was wrong? On the converse of that if I pay for insurance for an item I won I really don't care who pays if it gets lost as long as I get paid......but that's just me.....later

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Posted By: Jay Miller

The first post raises an interesting question that I haven't thought about before--at what point does title to a purchase change hands? Is it at time of shipment or at time of receipt? If a buyer chooses not to pay insurance and the seller can prove he shipped the item is the buyer the loser if the package is lost or damaged? While everyone may have their own view on this question I am unaware of a generally accepted view.

Second, I would have a problem if a seller charged me for insurance and self insured. The rate that you pay the USPS, FedEx or UPS for insurance is partially a function of their financial strength and their ability to pay a claim. The seller of an item/items on ebay does not have that same financial strength and if there is a loss of several or a major item he may not have the financial ability to pay.

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Posted By: Julie Vognar

yourself--is only as honest as the practicioneer!

I'm now remembering how my daughter got her F1.8 lense for her Minulta camera--my brother-in-law ordered one through the mail, it didn't arrive for a long time, he collected, bought a new one--and then the lense came. So he gave the tardy-arriving one to my daughter.

That's allways nice, too...

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Posted By: Judge Dred

Hello Lee,

I guess I wasn't too clear in my post (that happens a lot - I think I have adult ADD - or at least the inability to convey what I'm thinking).

The method of payment doesn't really matter. It's the method of shipment that I was trying to explain:

Here's what happens with my local post office:

1) I present the package to the clerk.
2) The clerk meters the package and places a postal sticker on that shows the cost of the delivery service.
3) The clerk provides me with a receipt that shows the destination zip code of the package sent. This receipt is dated so that I can prove that the package was sent on a certain date. This, of course, would prove that I shipped the package after the auction ended and after receiving funds for the transaction.
4) I retain the receipt until the buyer has indicated that they have received the package.

You are correct, the receipt only indicates the date and zip code to where the package was sent, it does not provide proof of delivery, but that's fine with me. Again, at least I have a document that proves an item was shipped to a particular zip code on a specific date.

I completely concur with you that delivery confirmation should be used. But there are a few considerations:

a) A lot of people shy away from what they perceive as high shipping charges. I know this sounds crazy, but it seems to happen.
b) I offer people different shipping options (insurance, 1st class mail, priority mail - just about anything possible). There are many buyers that are very shipping and handling charge conscientious and they don't want to pay for anything but the cheapest service (no insurance, no delivery confirmation). It's their choice at that point. I don't want anyone to feel that they are obligated to pay for anything except for what they chose. It makes for happier buyers.

Personally, it's probably smarter to force someone to pay for all of the other services but I figure that empowering people to make their own choices makes for a happier transaction on the buyers side. Or as a buyer I could eat a few bucks per transaction for my own peace of mind and pay for all the extras.

Now back to the insurance question and points made:

"would it be wrong to keep the insurance money for yourself and self insure...?

It's all in the eyes of the person that paid for the insurance. Some people feel intimidated by the expression "I am not responsible for lost or damaged packages that are not insured." PSYCH 101 - Some buyers might feel that the seller wont ship the package if the package is not insured. If the buyer sees that the package was not insured then there might be feelings of being cheated. Like I posted earlier - It would be very wise if someone is going to sell "self insurance" on an item. If the item does not have delivery confirmation what (besides being an honest person) would hold someone back from saying they never received the package?

Does anyone know what the rules and regulations for insuring this type of memorabilia? It would be a nice post.


"Would you be made (sic) if you paid for insurance only to find out the seller kept the money? I believe this is the way grading companies handle insurance...."

I think Jay's post is right on the money - large companies have the ability to self insure because of their financial resources. I'm not implying that you wouldn't have the ability to self insure.

I just feel that you really expose yourself if you self insure because what if the person got a bargain on the item and it doesn't show up. They would think that (more Psych 101) the seller didn't want to send the item because they didn't get enough for it.

About the only way to rectify the problem would be to go out and find a similar item and possibly lose money on the deal. I guess that would be extreme.

I apologize for the lengthy post - It's just an opinion and a few thoughts on a very good topic.

Insurance is something that you don't need but you buy it in case you do need it - isn't that what Yogi says (or something like that) in the Aflac commercial?

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Posted By: warshawlaw

is not the issue; the issue is who bears the risk of loss regardless of when title formally passes. All states have their own laws in reference to the issue. if the deal is between two businesses and over $500, the uniform commercial code as enacted by that state will likely kick in. as between non-businesses or a business and a consumer, the local law will kick in. Almost every state will honor a clear contractual risk of loss allocation between the parties which is why many sellers list things as "insurance or I am not responsible". What is less clear is what happens when the item is insured and lost or damaged.

Since the state law is critical, deciding which state has jurisdiction over the case is very important. The whole area of jurisdiction over internet and mail sales is a rapidly emerging field of law and the cases have not yet jelled to the point where a lawyer can say "if you do x, y will result". I suggest to my clients doing big-time mail order that every listing on ebay and any catalogue stipulate that any dispute be litigated in their home town using the law of their state. That gives you a fighting shot at blocking any attempt to drag you into court in some far away state. it would still require you to move to kick such a case out of court, but it is likely to result in your getting the case into a convenient court.

If you want to self-insure in the sense that you want to keep a little premium on each sale as a rainy day fund, I suggest you ship with some form of signature confirmation on expensive items. i like certified mail with a return receipt for this purpose. The price is fixed, not floating depending on the value of the item (only weight affects the postage), and you get a card back in the mail with the recipient's signature on it and a date of receipt. plus, you do not have to go to the post office for it. The idea of shipping from the PO and keeping the little receipt with the zip on it is not solid evidence if push comes to shove. All it proves is that you sent something to a particular zip. a signature from the recipient says it all. For really expensive stuff, i use fed ex because they get a signature and will furnish a declaration or affidavit admissible in court on request.

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Posted By: Judge Dred

Wow, that was very insightful. I was thinking more along the lines of smaller ebay sales. I think anyone that ships an item worth over $500 without some type of delivery signature confirmation (and possibly insurance) is absolutely nuts.

I guess the laws of "common sense" should prevail. What would a reasonable and prudent person do in certain situations. Personally I'd hate to see law enforcement (courts, etc.) get involved in minor disputes related to something purchased off an internet website or auction site. There are extenuating circumstances (like the CRAZYCANUCK and a few others) but those would represent the exception not the rule.

I guess feedback is ebays BBB and people should carefully read the comments in those sections. Recently someone provided a link to assist in searching for an ebay sellers negative postings:

http://www.toolhaus.org/cgi-bin/negs?

The sad part about something fun that involves money or value are the people that expoit it for the purpose of deceit.

Sorry to get off track.

The really neat part about the N54 VBC board is the variety of opinions and information that gets passed along.

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Posted By: Wesley

< For really expensive stuff, i use fed ex because they get a signature and will furnish a declaration or affidavit admissible in court on request. >

For the really expensive stuff, such as rare baseball cards, fed ex will only reimburse you for pennies on the dollar. For collectibles and one of a kind items, Fed Ex Ground has a $100 limit and Fed Ex Air has a $500 limit.

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Posted By: Lee Behrens

I just want to clear up the fact that this was a question only. I have not and will not "self insure". I think will all need to read these threads for what they are and not for what you think is implied.

Lee