Courier Insurance: Direct or Indirect Cost? By Eric Token At Isnare.com Ezine Articles

It is obvious that courier insurance is very important for courier businesses, offering protection against unwanted accidents and losses that might occur during a courier business’s operation. The cost of getting a proper courier insurance policy might be relatively high – although there are ways you can reduce them to a certain point – and it has became one of the major cost factors of a courier business. Recently, some courier companies began to charge their customers directly for courier insurance fees. This has started a debate among courier business experts on whether courier insurance fees should be considered a direct cost (charged directly to customers as part of shipping and handling cost) or indirect cost (considered an overhead cost paid by the courier company itself). There are several points of view to justify both theories, and both views are good for business. However, you can also combine these two interpretations and reduce your share of courier insurance fees at the same time.

It is clear that there are three types of courier insurance: vehicle insurance, goods-in-transit insurance and public liability insurance. Which are direct and indirect costs? Let us go through this one step at a time. Vehicle insurance is definitely an indirect cost. It is a cost that must be paid by your courier company in order to protect your assets. You can add this to your overhead cost, which will eventually be part of cost factors considered when determining the true cost of delivery. Goods-in-transit insurance fees are direct costs for sure. Some courier companies offer insurance as an optional service to their customers, allowing them to choose to insure or not to insure their delivered goods when they sign the delivery papers. This way, your customers are paying goods-in-transit insurance fees directly, and you will not have to spend a thing. Of course, public liability insurance is an indirect cost as well, since it is protecting your interests. You can choose to add it as part of your overhead costs of delivery, or simply put it as part of your company’s overall operating cost.

Knowing how to handle your courier insurance costs is important because it will affect your delivery cost and of course, the amount your customers have to pay to have their goods delivered. A courier business is one of the most competitive business fields these days, and having comprehensive and safe shipping services at affordable prices are crucial to your courier business’s success against competitions. By sorting your courier insurance costs properly, and adding them carefully to your overhead costs, you will be able to get the best possible cost combination and eventually produce lower delivery costs. Therefore, you can offer your customers high quality shipping services at low – or at least affordable – prices. Your customers will also have the liberty of having their goods shipped with or without insurance, increasing both your credibility and customers’ satisfaction at the same time.

Aside from the given costs scheme, there are several other combinations you can utilise to manage your courier insurance costs. All you have to do is assess your business as well as your customers properly, to get the best possible scheme of managing your courier insurance costs.

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