It's commonly known that when you order things on the internet, a shipping carrier will deliver it to your door. What is less commonly known is that not all packages will make it, or make it unscathed. What's even less known is that all these gigantic carriers each have their warts. To an eCommerce business like ours, we live "shipping exceptions" all too often. The worst part is, it's completely outside of our control, even though the perception is that we failed to deliver your shipment.
Now days, many internet transactions are in the hundreds or thousands of dollars. Shipping insurance has become a common and necessary feature, not unlike having auto insurance when driving a car. On City Racer, third party shipping insurance is active by default. A customer can opt out by unchecking the box and assuming the risk for shipping exceptions.
Without insurance, if a customer orders $1000 worth of merchandise and the carrier smashes it, the carrier will shrug and pay up to a $100 maximum claim following a lengthy investigation. That's not a scenario we want to see, but that's exactly what happened to a customer, except worse. The customer ordered $2000 worth of merchandise and opted out of insurance to save a few bucks. UPS mysteriously lost track of the package within their own facility. When we shared the news, the customer was extremely upset at us and demanded a refund. We ended up taking the hit and refunded his money. Effectively, we acted as his insurer -- one that's not funded by risk sharing premiums!
There's no economic model that can support an unfunded insurer; therefore, after the incident, we made the decision to make insurance mandatory on shipments valued over $300. We acknowledge not everyone will love this solution, but we know you will hate it more if you have to absorb the loss when the carrier didn't do their job. If you have better ideas, let us know!