Ask Nick Advice Column for Auction Users: It's Foolish to Pay Extra for Insurance
By Nick Sevino
eBay PowerSeller Nick Sevino (a pseudonym) answers questions about buying and selling on eBay.
I ordered a software program on eBay and I paid $1.30 extra for insurance. The program arrived promptly and was what it was supposed to be, but the label shows it wasn't insured. I don't think it's fair to pay for insurance and than not get it. Should I email the seller for a refund?
There's nothing to complain about. You received accurately represented product quickly at the price referenced in the TOS (Terms of Sale).
You can't really be sure if it was insured or not. There are third party companies such as U-Pic that insure independently of the Post Office. U-Pic Terms of service require that the package can't be marked as insured by the shipper. Also, your seller may be handling the delivery guarantee himself.
Knock on wood, our company has found less than 1 out of 1000 packages are lost using the USPS. We prefer to handle the occasional loss ourselves. We re-ship the product promptly and provide far faster service than dealing with the Post Office for insurance claims. The time and effort to make a postal claim, especially on smaller packages, just isn't worth it.
So we don't insure on items under $300. Higher value items, international, and high risk areas (like you've seen in the movies) are always insured.
This brings up a different subject. Why did you pay extra for insurance? I know this will be controversial - some sellers are going to take offense that I take the position that adding an option for insurance separately is gouging.
My question to you is, does Amazon, Buy.com or any reputable retailer give you the option to pay for insurance? Never seen it. So why is a seller on eBay held to a lower standard?
Nick Tip: Always purchase with a credit card (directly or through PayPal), and never purchase extra insurance. Doesn't matter what the seller says, in domestic transaction he is responsible to deliver the product undamaged to your door.
According to Credit Card Law, a buyer is not responsible for paying for a good or service that he doesn't receive. PayPal clearly states that seller must provide proof of delivery to be covered by PayPal Seller Protection, which covers sellers in event of a credit card chargeback.
More about Buyer Protection on PayPal: http://www.paypal.com/cgi-bin/webscr?cmd=_protections-buyer-outside
More about Seller Protection on PayPal: http://www.paypal.com/cgi-bin/webscr?cmd=p/gen/protections-outside
A seller can talk himself blue in the face, but if he accepts a credit card and can't prove the buyer received it, then he is subject to a charge back. (Any armchair lawyers out there, I'd love to hear about UCC rules, etc.)
PayPal also insists that the buyer receive the item as a condition of service. The long and short is that I never pay extra for a service that the seller is obligated to provide anyway.
Many sellers also "self insure," but the term should be used carefully. It's not really legal to call it self-insurance. Ethically, a seller should substitute wording such as Delivery Guarantee, or "We guarantee the item will arrive safely." But sometimes it's just easier to use the word insured.
Nick Tip: If you are shipping a lot of packages and don't feel comfortable self-insuring, U-Pic will insure your purchases for a discount. U-Pic is negotiable depending on Volume with rates as low as 20 cents per $100.
To all you sellers out there charging extra for insurance, I say many buyers perceive you as money grubbing, and you may losing a lot of business.
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