Should You Pay Extra to Protect Holiday Shipments?

Millions of holiday packages are delivered in the final days leading up to Christmas. FedEx expected to handle 20 million packages on December 16 alone, and UPS planned to deliver nearly 29 million packages on December 17. The U.S. Postal Service expected its busiest day for shipments to be December 19.

With so many packages being sent, you want to make sure that anything you send arrives safely. The question is whether you should pay extra to do so.

FedEx, UPS and the U.S. Postal Service do assume liability for loss or damage to packages they ship up to a certain limit at no additional charge. There's really no reason to purchase extra protection if the value of the gifts you are shipping falls below those liability limits. But if you want more protection for gifts that exceed those limits, you’ll have to pay for it. Here’s what you need to know about the protection your packages will receive from the major shippers, plus steps you should take to avoid having to file a claim for damaged, lost or stolen items.

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FedEx. This shipping company limits its liability for U.S. package delivery loss or damage to $100, unless you pay extra to declare a higher value. FedEx charges 85 cents per additional $100 of value (with a minimum charge of $2.55). Paying extra does not provide insurance coverage. Rather, declaring the value of a package establishes FedEx’s maximum liability, and it’s up to you to prove actual damages. FedEx also limits the maximum declared value to $1,000 for several items including artwork, antiques, jewelry and glassware. See the FedEx terms for declared value and limits of liability.

UPS. Packages are automatically protected against loss or damage up to $100, but UPS states that it is not liable for packages that are improperly packed. If you ship something worth more than $100, you can pay extra – a minimum of $2.55 in 2013, going up to a $2.70 minimum in 2014 – to declare a higher value for the contents. This does not provide insurance coverage, but rather establishes the maximum liability UPS is willing to assume and gives you more recourse when filing a claim, says Natalie Black, public relations manager at UPS. See the UPS Declared Value Q&A for more information.

USPS. At no extra charge, the U.S. Postal Service provides $50 of insurance for Priority Mail service shipments and $100 of insurance for Priority Mail Express service. Additional insurance coverage up to $5,000 can be purchased starting at $1.95 (price based on value). Opting for registered mail allows for the purchase of additional insurance coverage of up to $25,000.

Protect your packages

Pack and label properly. Use a strong (preferably new) box and at least two inches of packing material around your item. Use heavy-duty packing tape to seal your package. Label packages as “fragile” if they need extra care. The USPS recommends printing addresses (both yours and the recipient’s) in all capital letters.

Let the recipient know to expect a package. As much as you might want to surprise friends and family with holiday gifts, it’s better to let your recipients know that you are shipping something to them. That way you can find out whether to send it to their home or business address or to one of the shipping company’s locations, where packages can be picked up to avoid having them sit on a porch where they can be stolen. FedEx has a free service called Delivery Manager that allows you to provide specific delivery instructions, such as “deliver package to back door.” With UPS My Choice, you can tell a delivery driver where to leave a package at no extra charge.

Require a signature for delivery. You can pay about $2 to $3 extra to require that a recipient sign for a package to receive it. This ensures that your shipment won’t be left on the doorstep when no one is there to receive it. If no one is around to sign for a package, a note typically is left stating when the shipping company will attempt to deliver it again or providing a number that can be called to arrange to pick up the package.

Buy gifts with a credit card. Several credit cards offer purchase protection that covers items that are damaged due to shipping. Check with your card issuer. LowCards.com CEO Bill Hardekopf says that these policies typically state that a product you purchase with your credit card must be in working condition when you receive it, or it will be replaced. This feature also can provide theft protection (for an extra charge) for up to 90 days from the time of purchase, he says.

Award-winning journalist, speaker, family finance expert, and author of Mom and Dad, We Need to Talk.

Cameron Huddleston wrote the daily "Kip Tips" column for Kiplinger.com. She joined Kiplinger in 2001 after graduating from American University with an MA in economic journalism.