Declared Value Coverage

Declared Value Coverage: The Ultimate FAQ Guide

In this guide, you will find all information you need about declared value coverage.

So, if you want to learn more about declared value coverage, read this guide.

So enjoy the read…

What does Declared Value mean?

There are two meanings of declared value which are clearly explained below:

  1. It refers to the value that is placed on imported goods by a given importer. This value of goods is declared for customs clearance at the entry port and is used to establish the duty amount to be paid on imported goods.
  2. It can also mean the amount a shipper stated to a given carrier as the worth of their shipment. The carrier will be liable to compensate the shipper based on the shipment’s declared value if lost or damaged in transit.

 

What is Declared Value Coverage in Shipping?

COSCO Shipping

 COSCO Shipping

In shipping, declared value coverage is a type of loss or damage coverage that raises the financial ability of the carrier.

Declared value coverage aims to increase the financial capacity of the page to ensure it matches the value of declared cargo.

It is important to note that declared value coverage is not cargo insurance. It is limited to the period whereby the cargo has a single carrier.

What is the Purpose of Declared Value Coverage?

Purposes of declared value coverage include:

  • Ensuring speedy clearance at customs.
  • Getting better shipping value from carriers.

How does Declared Value Coverage work?

Declared value coverage applies when the damage or loss is due to the negligence of the carrier.

The shipper will have the responsibility to prove that the carrier was negligent.

Is Declared Value Coverage the same as Marine Insurance?

 

 

Figure 2 Marine cargo insurance policy

 Marine cargo insurance policy

No, declared value coverage is not the same as marine insurance.

Declared value coverage is subjected chiefly to exclusions, policy limits, deductibles, and warranties which are not well elaborated to the shipper.

On the other hand, Marine insurance takes care of a shipment throughout its entire journey from the pickup to the delivery point.

It will ensure that the shipment passes across multiple carriers and transport modes regardless of having a loss or damage negligence of the carrier.

Marine insurance provides door-to-door protection regardless of the carrier, but this is not the case with declared value coverage.

Marine insurance tends to pay less regardless of whether the carrier’s negligence has been proven.

On the other hand, declared value coverage would pay in full if it has been affirmed that the carrier was negligent.

Declared value coverage does not pay for damage or loss which occurred outside the control of the carrier.

Marine insurance may cater to damage on loss that happened outside the carrier’s power depending on the parties’ agreement.

Marine insurance pays the shipper for the total value of the cargo, inclusive of freight and related costs.

On the other hand, declared value coverage pays the shipper up to the declared value of their shipment.

The declared value does not pay to expedite the replacement of goods.

On the other hand, Marine insurance can pay to accelerate the replacement of goods depending on the agreement between the parties.

What is the Difference Between a Shipment’s Declared Value and Sum Insured?

Declared value boosts the limits of liability standards for an increased rate of freight.

It does not alter the terms of the bill of lading because similar limitations and exclusions apply.

Sum insurance refers to the level of coverage in general policies of insurance.

It is the maximum liability that the insurance company will undertake for compensation in case of loss or damage.

The shipments declared value and the sum insured value are often confused, and if these values are incorrect, there might be problems of underinsurance.

How do you calculate Declared Value?

The declared value of a shipment can be calculated, which are:

  • By use of the cost price: this should be the cost at which you purchased the products for customs declaration.
  • Use of retail price: for these shipments, the value should be that which you intend to sell the products.

Customs use the declared value to determine duties and taxes and to clear your shipments.

What are the Limitations of Declared Value Coverage?

Some of the declared value coverage include:

  • It is not cargo insurance.
  • Declared value coverage is limited only to the period that cargo has a single carrier.
  • It only kicks in if loss or damage occurred as a result of negligence by the carrier.
  • The shipper must prove that the carrier was negligent for declared value coverage to apply.

How long is Declared Value Coverage suitable for?

It is limited to the period that the cargo has a single carrier.

Declared value coverage only applies to incase damage or loss occurs due to the carrier’s negligence.

What happens to Shipments without Declared Value Coverage?

For shipments without declared value coverage, the carrier’s maximum liability will be $100 for losses or damages at no cost.

Loads that are valued over $100, you may declare a higher value of the item at the transaction time.

You will have to pay an additional charge for the declared value of the given amount.

In case you do not report a higher value, the maximum reimbursement you will receive will be $100.

What is the Impact of Adding Declared Value Coverage to my Shipment?

It is important to note that declared value is not insurance, but it is the maximum liability for damage or loss due to mishandling.

Some of the impacts of adding declared value coverage to your shipment include:

  • Adding declare a value to your shipment will make the cost of shipping rise.
  • In case you specify a declared value of $500 or more, then the importer will automatically include the direct signature confirmation. In this case, you will not need to select the immediate signature confirmation.
  • For shipments that are multi-box, the declared value by the importer will be applied to each box in the entire load.

How do Different Carriers Handle Declared Value Coverage?

They handle declared value coverage as the value of each shipment unit for couriers, and it must be indicated in the paperwork.

It can impact the rates of shipping as more costly shipments will attract higher shipping rates.

Carriers also use the particular value to determine the maximum amount you can recover for your shipping insurance.

It is done in the case that your shipment is damaged or lost during transit.

Many carriers tend to set this value at $100 unless stated differently.

However, do takes this value to be the insurance liability for your shipment as it just indicates your cargo’s financial legibility.

Declared value coverage brings about different impacts depending on the carrier that you use.

Some carriers may use it as the insurance value, while others develop maximum financial liability for theft and loss.

How does Declared Value Coverage Affect Customs?

In customs clearance, declared value coverage is assigned to imported goods by the importer of records.

It is used to determine how much imported tax is imposed on the shipment.

Therefore, you should calculate it well to avoid overpayment or getting into trouble by making a false declaration

.

It is essential to be accurate when declaring the value mostly in i9nternational shipping.

In case customs suspects wrong value declaration, your cargo is held, and they will need proof of purchase to release it.

What is the procedure for claiming Declared Value Coverage?

The procedure for claiming declared value coverage entails:

  • The carrier’s liability for loss or damage for each international shipment or domestic package is limited to $100 without a declaration of value.
  • The maximum declared value per package is $50,000 per package. The carrier’s liability for loss or damage is increased up to $50,000 by making a value declaration for an additional charge.
  • Specific domestic packages are eligible for the enhanced maximum of $70,000, subject to restrictions put in place.
  • Declarations whose value ranges between $100.01 and $300 are subject to a charge of about $3.45.
  • Declarations of a value above $300 incur a charge of about $100 for each of the total declared value.
  • For international shipments with a declared value of more than $, 50,000there is a process of calculating them. You should multiply the total declared value by the rate and determine the displayed value charge for your shipment.
  • For cargo tendered to a carrier with a declared value amount of more than $1,000, you must retain a high/value shipment summary. This summary should be signed by the driver and should be provided when requested.
  • The charges for declared value are included in amounts that are billed to third parties or receivers.

Does Declared Value of a Shipment include Shipping Cost?

Usually, declared value reflects the shipment cost to the business and is mostly lower than the customs declared value.

During shipping of your package, you will obtain declared value coverage.

Declared value is also an option when determining freight charges. It will also assist in limiting the liability of the carrier for damages, delay, or loss.

Can Declared Value of a Shipment be Zero?

Yes, the declared value of a shipment can be limited to zero for those that do not have a declared value.

Thus, if your load is lost or damaged, the carrier will not be liable because you did not say the deal.

How do you Prove the Declared Value of Shipments?

You should provide relevant documents to prove the declared value for your shipments.

The declared value must be the same as the actual value of your cargo, and the documents should support this.

The declared value coverage of your cargo is the carrier’s responsibility in case of thefts, damage, or loss of your goods.

It will be compensated up to the declared value of your cargo, but the additional declared value may be allowed in consultation with your carrier.

Are all Shipments Eligible for Declared Value Coverage?

Most of the shipments are eligible for declared value coverage as long as they do not violate the carrier’s terms of service.

Packages shipped by carriers are eligible for $100 basic coverage, while some commodities qualify for up to the $50,000 range.

What are the Standard Terms and Conditions for Declared Value Coverage in shipping?

Different carriers possess unique terms and conditions outlining their policies for declared value coverage policies.

It is essential to familiarize yourself with these policies before shipping your cargo, as failure to observe the rules might result in claims denial.

You should specify accurate values before shipment pick up or drop off because proof of value is established at both points.

In case you have questions about declared value coverage, it is always good to direct them to your coverage provider.

Does Declared Value Coverage cover Duty and Taxes?

No, declared value coverage does not cover duties and taxes.

However, customs use the value of declared value coverage to establish taxes and responsibility to be imposed on your cargo.

Import duty

 Import duty

Is there a maximum value of an item Declared Value Coverage would cover?

Different carriers tend to have different values for declared value coverage.

This value is used to determine the maximum amount you can recover for your cargo if it is lost or damaged during shipping.

Most carriers tend to set the value for declared value coverage at $100, but for others, it can be up to even $50,000.

If your package is not so expensive, then $100 will be sufficient.

You should discuss with the carrier for higher value packages and set a reasonable amount to incur it is lost or damaged.

However, you should not consider this as the insurance liability for your shipment but as just your cargo’s financial and legal ability.

What are some of the things not covered when you Declare Value during International Shipping?

Some of the things not covered when you declare value during international shipping include:

  • The shipment is not catered for ”door-to-door”. The declared value is only valid for the period that the cargo is the custody, care, and control of the shipper.
  • Does not provide coverage for other losses like ”Acts of God” and any other losses outside the carrier’s control.
  • When buying declared value, costs such as packing expenses, freight charges, and forwarding fees are not covered.
  • Any shipment without a scan.
  • Data stored on any media.
  • Bulbs or fluorescent tubes.
  • Prepaid letters.
  • Articles of unusual value.

What are some common Exclusions and Warranties in Declared Value Coverage?

Some common exclusions and warranties in declared value coverage include:

  • Theft may occur when the vehicle is left unattended.
  • Dishonesty on the part of some of the carrier’s employees.
  • For example, theft of certain commodities, cigarettes, fashion, cell phones, computer memory, apparel, and many more.

What is the difference between Declared Value and Customs Value?

Declared value refers to a declaration to the carrier for increasing the carrier’s limit of liability.

Customs value, on the other hand, refers to affair market value or sales price of your shipment even if it is not for resale.

Customs value serves as an affirmation to customs for establishing the applicable taxes and duties.

What are the Consequences for incorrect shipment Value Declaration?

Incorrect shipment value declaration will result in your shipment being held at the customs. You will then be required to provide your proof of purchase to the regional customs officer for your shipment to be released.

Therefore, it is essential to ensure that you are accurate when declaring the value for your shipment, more so in international shipping.

When should I purchase Declared Value Coverage?

You should purchase declared value coverage after a shipping label is generated and you possess the customs or tracking details available.

How do I pay for Declared Value Coverage?

Charges for declared value coverage can be:

  • Billed to the shipper (prepaid).
  • Freight collects (billed to the receiver).
  • Billed to a third party.

You can pay for declared value coverage using the following methods:

  • Wiring money straight to the carrier through an international transfer.
  • Use of a broker.
  • Transfer of the funds through western union.
  • You can use PayPal.

What is a ‘Flat Rate Coverage’ in relation to Declared Value Coverage?

Carriers offer ‘flat rate coverage’ as an alternative to typical report-based policies.

All outbound and inbound shipments are insured on a given rate monthly with no need for reporting your freight to the carrier.

Some of the benefits of the ‘flat rate coverage’ include:

  • There is a monthly fixed cost.
  • No need for reporting.
  • It covers all your shipments, inbound and outbound, domestic and international.
  • Has a flat rate that is discounted.
  • Claims are processed faster as there is no need to submit shipping reports before a claim is processed.

Are there any special Packaging Requirements for Declared Value Coverage?

Yes, there are packaging requirements about declared value coverage.

Declared value coverage is not available for the following types of packages:

  • Items that lack proof of value.
  • Additional restrictions are detailed in the policy documentation.
  • Live animals.
  • Perishable items like flowers and food.
  • Gift cards, cash, and any other items that have cash value.
  • Plants and seeds.

What Documents do I Need to Provide when Submitting a Claim for Loss or Damage to a Shipment Protected Declared Value Coverage?

Some documents you need to provide when submitting for loss or damage of a shipment protected declared value coverage include:

  • Photographs of the Shipment that is damaged if they are available.
  • Packaging list.
  • The waybill of the shipment that was damaged or lost.
  • Commercial invoice of the items in the damaged or lost shipment. Note that if you provide a proforma invoice instead of a commercial invoice, the item is treated as second-hand.

It is essential to provide all the documents within five business days of the delivery date for damage, not on the delivery receipt.

In case the damage is noted on the delivery receipt, you can fill the claim within ninety days.

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