Can you charge shipping insurance if you don't insure?
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Maximo
Member
Hello, new guy online, I would think not! That would be conciderd fraud, and if it is over $20 and shipped via postal, it is a federal offence on top of the crime.
Collecting money for a service not rendered is a crime.
Maximo
Collecting money for a service not rendered is a crime.
Maximo
birdshot8's
Member
it is called self insured, they charge insurance and hope it makes it. if not they have their own insurance fund. many cities do the same thing with their employees health plan. i think it makes good business sense if the loss is managable.
Flyboy
Member
It would depend upon the specific terms of the sales contract. Did you agree on "UPS shipping insurance," or just "insurance?" If the latter, the seller could claim that he was self-insuring, and it wouldn't be fraud until he refused to pay a claim (and then it would probably be insurance fraud, not sales fraud). If the former, then yes, it's potentially sales fraud.
The devil is in the details where contracts are concerned.
The devil is in the details where contracts are concerned.
LemmyCaution
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Doesn't 'self insurance' generally require an escrow account set aside to cover claims and shouldn't insurance charges be deposited into such an account?
Liabilty self insurance certainly works this way. You can't just say "I'm self insured. Don't worry. If something goes wrong, I'll cover it."
At least I'm not allowed to do that with my automobiles. I know that.
Liabilty self insurance certainly works this way. You can't just say "I'm self insured. Don't worry. If something goes wrong, I'll cover it."
At least I'm not allowed to do that with my automobiles. I know that.
Flyboy
Member
Actually, Lemmy, it depends upon jurisdiction. Since you mention auto insurance, I recall that Ohio has (or had) a provision allowing one to either post a cash bond to self-insure, or to file a certificate of self-insurance if he owned more than twenty-five vehicles. No escrow required on the latter.
In any case, the answer to the OP's question is "it depends upon the exact circumstances of the case and the jurisdiction(s) involved." This one just doesn't have a simple answer.
In any case, the answer to the OP's question is "it depends upon the exact circumstances of the case and the jurisdiction(s) involved." This one just doesn't have a simple answer.
Chas.
Member
No escrow account in Tennessee, at least personal automobile liability (as opposed to business) doesn't require anything.
"Don't worry. If something goes wrong, I'll cover it". That's exactly how it works here(or doesn't work).
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dogtown tom
Member
Insurance protects the seller (shipper), not the buyer (receiver).
When you make a purchase the seller has an obligation to properly pack and box the shipment so that it arrives in the same condition as advertised.
I get a chuckle out of sellers who say that they will insure the shipment if the buyer asks for it. The seller covers his own butt by insuring the package.
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When you make a purchase the seller has an obligation to properly pack and box the shipment so that it arrives in the same condition as advertised.
I get a chuckle out of sellers who say that they will insure the shipment if the buyer asks for it. The seller covers his own butt by insuring the package.
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medalguy
Member
You're exactly right. You insure the shipment against loss getting it to the buyer. The onus is on the shipper to be sure the shipment reaches the buyer.
I owned my own business for about 30 years and we always self-insured. We calculated we were paying over $1500 a month at one point on UPS excess insurance. We sat down and looked at the pittance we had claimed in losses over the year and decided it was in our interest to self-insure. When we lost a shipment to a buyer, we simply replaced the items out of our own pocket. It's that simple.
Auto insurance is another matter, since you might be looking at a claim in the millions of dollars. It's pretty difficult to self-insure against that kind of loss. A package worth 2-300 bucks is another matter entirely.
I think it would be fraud only if you refused to replace/pay for a lost package that you self-insured. Another example could be paying published UPS rates for a shipment. No volume shipper pays those rates. Everybody gets some kind of discount from published rates although most people don't know this. Is it wrong to charge published rates? I don't have a problem with that policy either.
I owned my own business for about 30 years and we always self-insured. We calculated we were paying over $1500 a month at one point on UPS excess insurance. We sat down and looked at the pittance we had claimed in losses over the year and decided it was in our interest to self-insure. When we lost a shipment to a buyer, we simply replaced the items out of our own pocket. It's that simple.
Auto insurance is another matter, since you might be looking at a claim in the millions of dollars. It's pretty difficult to self-insure against that kind of loss. A package worth 2-300 bucks is another matter entirely.
I think it would be fraud only if you refused to replace/pay for a lost package that you self-insured. Another example could be paying published UPS rates for a shipment. No volume shipper pays those rates. Everybody gets some kind of discount from published rates although most people don't know this. Is it wrong to charge published rates? I don't have a problem with that policy either.
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