There are many important variables when it comes to international shipping costs, but declared value is one that can massively affect shipping costs. There are several reasons why the value of your shipment is important, and why you must declare it honestly and accurately.
But, don't confuse this value to be the insurance liability for the shipment. Both values are different and to understand them better we need to understand what a value declaration is, how different couriers handle it, how it differs from insurance, and how it affects customs. That’s exactly what we’ll cover in this article.
What is Declared Value?
The declared value of a shipment is what the sender says the shipment’s goods are worth. It has two important purposes: ensuring speedy customs clearance and getting better shipping value from couriers.
In the case of customs clearance, this value is assigned to imported goods by the importer of records. It’s used to calculate how much import tax or duty should be levied on the shipment. So, it’s important to get this right to avoid paying too much (or getting in trouble making a false declaration!).
For couriers, the value declaration is defined as the value of each unit of the shipment and must be written in the paperwork. This can affect the shipping rate; more expensive shipments will attract higher shipping rates.
This particular value is also used to denote the maximum amount you can recover from your shipping insurance if your shipment is lost or damaged in transit. Many courier services, like FedEx and UPS, set this value at a standard $100 unless you say differently. But, don’t take this to mean that this is the insurance liability for the shipment; it’s essentially just the financial legal liability of your package.
This value has a different impact according to the courier company you use. UPS uses it to develop the maximum financial liability for loss and theft recovery; FedEx uses it as the insurance value.
You need to be accurate while declaring this value especially in the case of international shipping. If customs suspect that the shipment is not declared properly, then your package will be held. The regional customs officer will require your proof of purchase to get your shipment moving again.
How Do I Calculate the Declared Value?
There are two ways to calculate the value of a shipment. One uses the cost price; the second uses the retail price. The value you declare for personal shipments should be the cost at which you purchased the item; for customs declarations in the case of retail shipments, the value should be the price at which you intend to sell the item.
Declared value = cost of purchase of the item
The declared value for customs = price at which the item is sold
Customs use this value to clear your shipment and determine taxes and duties. Additionally, your commercial invoice should have the HS value and a detailed description of your shipment. If any of the information is inaccurate, your package will be held at the customs or courier services.
Understanding FedEx Declared Value
FedEx declared value is considered as the insured value of the shipment. It doesn’t offer insurance coverage for your shipment. If there is no value declared, then the maximum liability is $100. If your package isn’t expensive, this is adequate. However, if your package is of higher value, then the FedEx value declaration should be set to an amount that is sufficient in case of package loss or damage.
You need to understand how to declare value with FedEx if you are planning on shipping with the courier. Since the courier doesn’t automatically offer insurance coverage, they encourage you to use insurance agents or brokers of insurance companies to get coverage for your package. If you have a package with a value of more than $500 declared, FedEx can restrict it to be released without a signature even after authorization.
The coverage for the first $100 of the declared value is free but if your value declaration is more than this, you have to pay a minimum of $3 for the first $300. The maximum possible value declaration is different for different mail classes.
- Priority, First or Standard Overnight, 2 Day & A.M., and Express Saver: $50,000
- FedEx Ground and Same Day: $2,000
- First overnight, FedEx 1 Day, 2 Day, and 3 Day Freight: $50,000
- FedEx Envelope and FedEx Pak: $500
You need to understand that there are certain limitations on Fedex’s value declarations. If your package contains furs, precious stones and metals, art, antiques, stocks, cash letters, or bonds, the maximum value will be $1000.
FedEx doesn’t cover any loss in profit or income as a result of delay or damage during shipping. FedEx’s liability for loss or damage to the package is either the repair cost, depreciated value, or replacement cost, whichever is less, no matter the value you declare.
The timeline for your claim depends on which service you’re using. For FedEx Express, you must file a claim within 21 days after delivery. For FedEx Ground, the claim is to be made within 60 days of the delivery date.
Understanding UPS Declared Value
UPS declared value is used to establish the maximum liability in case your shipment is lost or damaged in transit. UPS automatically sets the liability to $100 for every package if you don’t declare otherwise. The courier has clarified that UPS declared value is not insurance and you can declare a higher value for your shipment with additional charges.
UPS value cost is set at $1.05 for every $100 above the first $100. However, the minimum amount of charges for any value is set at $3.15. This means that you pay the same charges, whether if you raise the value to $150 or $300.
UPS doesn’t offer insurance for any shipment valued at over $100. You have to get your insurance from insurance brokers and other companies. If the UPS value declaration is less than $100, UPS will be financially liable for either the value you declare or the depreciated price or the repair cost, whichever is lower. A few other things you should know are:
- The maximum amount for value declaration is $50,000 but only if the UPS account number is provided or from the UPS store
- $5000 is the maximum value if you use UPS online shipping
- The maximum amount for any shipment done through t dropbox and international shipments containing jewelry is $500
- $999 is the maximum value if you use shipper release
- For packages shipped through a third-party retailer, the maximum value is set at $999
- If you are using a UPS print return label, mail return label, electronic return label, 1-UPS pickup attempt, return services, or UPS web returns, the maximum value is $1000
There are some conditions and restrictions when it comes to making a claim, but you can read this in more detail here. If you’re sending articles of unusual value or have not properly packed the shipment, then UPS will not pay for damages or loss.
Declared Value Vs Shipping Insurance
Understanding the difference between declared value and shipping insurance is very important if you want to save on shipping. We’ve already discussed the former, so now we’ll delve into the latter. Shipping insurance is the monetary coverage you get for your shipment to protect it against loss or damage.
FedEx and UPS offer insurance coverage up to $100 to every package unless advised otherwise. Shipping insurance is very important for recovering the value of a shipment if it’s lost or damaged. This is especially true if you’re shipping valuable items.
Calculating and mentioning these values accurately is very important. If there’s any ambiguity, your package can be held for further investigation at customs. To make things easy, you can use third-party insurance providers, including Easyship. Easyship offers coverage of up to $5,000 for valuable shipments. If you’re booking a shipment through the Easyship dashboard, you can easily add on insurance in the shipment creation process. We also offer flexible insurance coverage, so you can pay and cover as much (or as little) as you want!
See How Declared Value Can Protect Your Shipping
Declared value can offer peace of mind when shipping valuable items. Shipping can be tough on packages. Improper handling can cause loss or damage to your shipment. In such cases, you should at least get some of the value returned to you to compensate for the loss during shipping.
This value helps you determine that compensation while shipping insurance is that compensation. Value declarations are also very important in helping customs to evaluate the duties applied to your package. This is very important if you are sending a package to an international destination.
Easyship can be your partner in this process. We make it easy for you to get insurance for your shipment. Easyship will handle everything for you - just sign up for free and let us handle it!
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