Shipping protection is insurance for your packages. As a Shopify store owner, you might be thinking, “Why do I even need this?”
I’ll let the numbers speak: Over 85 million packages arrived damaged or broken in 2023. And theft? That’s a whole other problem. Research from Security.org showed that $12 billion worth of packages were stolen in just 12 months.
That’s a lot of lost revenue. Shipping protection won’t magically save you, but it can protect you from the issues these incidents bring.
In this guide, I’ll show you everything about shipping protection, what stores need it the most, and the best Shopify apps to use.
What Is Shipping Protection?
Shipping protection is a “safety option” that merchants can offer to their customers to cover items that are lost, damaged, or missing during delivery.
Here’s what happens: A shipping protection provider steps in to handle the issue so you won’t have to pay for it out of pocket.
It’s usually available as an add-on that your customers can choose. Like this one:
Imagine that you sold a pair of premium headphones (for $120) to a customer named Eric. When the package arrived, the headband had a crack and the left speaker wasn’t working (uh-oh).
Even if it’s not your fault, you’d need to refund or exchange the product. Or else… you’ll get a bad review (and an unhappy customer). But since Eric opted for the shipping protection, he filed a claim, uploaded a photo, and got a refund sent out within 24 hours.
The best part? You don’t have to pay anything on your part (well, at least for the claim).
The Benefits of Shipping Protection
Okay. Now, you know what shipping protection is. But why should you really offer it?
Here’s our hint:
First, it gives more than monetary protection.
Second, it helps you build trust with buyers and take off the burden from your team.
Third, it makes claim filing easier and gives customers peace of mind.
For E-commerce Store Owners
You can lose three things due to delivery issues: your product, customer, and… sales. But shipping protection gives you a chance to save the last two because a provider will cover the cost for you.
Also, this safety net changes how your customers shop. How?
Let’s say Juliet bought a handmade ceramic bowl set from your store. Two of them shattered in transit. Good thing she purchased shipping protection at checkout. So, she submitted a quick claim, got a new bowl, and even left you a kind review for how fast it was resolved.
As you can see, shipping protection can turn a merchant’s nightmare into a customer-saver experience.
Lastly, you can say goodbye to headaches.
One of our clients used to spend hours processing a return due to a damaged or stolen item. They had to review each document, contact the shipping carrier, and file the refunds manually.
But thanks to our shipping protection feature, they could now relax and review the claims in under five minutes.
For Consumers
Now, as a customer, is shipping protection really worth it?
Yes, it is. It can protect your hard-earned money and also allow you to resolve delivery problems in a snap.
Zippia mentioned that the average shopper spends $430 on Black Friday alone. That doesn’t include spending on birthdays, holidays, or weekend splurges.
Let’s say you spent that amount of money to buy a Scandinavian wooden cabinet as a milestone gift. But when it arrived, it was dirty, and the corners were chipped. What would you feel?
Without shipping protection, you might have to chase the retailer directly and hope for a cooperative one. There’s no guarantee that you’ll get any returns. And you might end up crying in the corner over a broken cabinet you saved for months.
Now, imagine that same situation with shipping protection. You filed a claim, uploaded a photo, and the process began immediately. You didn’t have to beg (or send a 5-paragraph email explaining what happened).
Which do you think is better?
What Stores Should Prioritize Shipping Protection the Most?
Some businesses get hit harder by shipping problems than others. If you’re one of them, protection is more important for keeping your business running.
Here’s who should think about adding protection first:
- Stores selling expensive or breakable stuff: Ever shipped a glass picture frame that arrived in pieces? When fragile items break during shipping, you’re stuck covering replacement costs and dealing with upset customers (which we don’t want to happen).
- Electronics retailers: Porch pirates love grabbing tech packages because they’re valuable and easy to sell. Over 120 million packages got stolen last year, and electronics are always top targets.
- Shops with unique items: If you sell handmade jewelry or art, losing a package means losing something you can’t replace. Your customer gets frustrated, and you lose money.
- High-volume stores: When you’re shipping hundreds of orders weekly, even small problem rates add up fast. About 11% of packages arrive damaged at warehouses. If you’re doing 200 shipments a week, that’s roughly 22 headaches you’ll need to handle.
Vintage shops, furniture sellers, and stores that generate more profit from international shipments will also enjoy more benefits from this protection.
How to Handle Shipping Issues: Claims and Resolution Process
Up next is the process. I’ll show you how the usual claim and resolution process works.
Note that there’ll be some slight changes depending on the provider.
What to Do When a Package is Lost, Damaged, or Stolen
Acting fast can save everyone time and stress when shipping goes wrong. Imagine one of your customers ordered two laptops from your store but only received one damaged device.
Here’s what they should do:
- Check tracking information to confirm delivery status and location
- Take photos of the damaged laptop and packaging immediately
- Look around the delivery area and check with neighbors or building management
- Contact your store within 24-48 hours to report the missing and damaged items
- Keep all original packaging and documentation
Your role here is to guide your customers through the process of filing their shipping protection claim.
The process usually starts through your website or the protection provider’s portal. Customers need their order number, photos of any damage, and a clear description of what happened. Most claims get reviewed within 2-3 business days. But… special cases might take longer.
Reimbursement, Replacement, vs. Store Credit
What will your customers receive when their claim gets approved? Protection providers typically offer three options: full cash refunds, replacement items, or store credit.
Here’s how they differ. Let’s say your customer’s $500 laptop arrived broken.
- Reimbursement: They get their $500 back to their original payment method (credit card, PayPal, etc.)
- Replacement: You send them a new laptop of the same model at no extra cost.
- Payout: They receive $300 in store credit to spend on anything in your store. Plus, they can keep the item.
That’s how shipment protection works for you.
Top 5 Shopify Shipping Protection Apps
Here are the best Shopify apps for shipping protection. It includes ParcelPanel, Captain Shipping Insurance, and ShipCheck.
| App Name | Pricing | How Does Protection Work for Merchants? | Best For |
| ParcelPanel | Free plan available. $11/month for 200 orders | No cost to merchants. But customers pay a small fee at checkout. | Stores wanting hands-off protection + automation |
| Captain Insurance | $11/month + 3.99% of protection sales | You keep all protection fees. Fully merchant-run program. | Stores that want full control |
| Shipcheck | $9.95/month | You keep all protection fees. | Multilingual or global Shopify stores |
| Guide Insurance | Custom pricing | Protection fees go to the platform and it handles replacements on your behalf. | Merchants focused on customer experience |
| ShipPro | $9.99/month | You keep all protection fees. | Stores looking for a profit-driven setup |
1. ParcelPanel
ParcelPanel is a Shopify app that handles post-purchase tracking with three key features: real-time package tracking, automated shipping notifications, and branded tracking pages. But we’ll focus on its shipping protection.
ParcelPanel Protection covers packages (both for international and domestic shipments) against damage, loss, theft, or major delivery delays. Seel, a licensed U.S. insurance provider, backs the protection, so your customers work with a real (and trusted) insurer.
Your customers can file a claim in five easy steps:
- Step 1: Visit Seel’s resolution center (linked in the confirmation email or tracking page).
- Step 2: Select the issue (like “package marked delivered, but not received”) and upload details.
- Step 3: Choose a payment method for compensation.
- Step 4: Seel reviews the claim (usually within 48 hours).
- Step 5: Once approved, the customer receives compensation directly.
Your shipment becomes as worry-free as it can be.
Want to see how it works? Book a demo with ParcelPanel or click the button to explore it in real time!
#1 Shopify Tracking Solution for eCommerce
2. Captain Shipping Insurance
Captain Shipping Insurance lets you offer shipping protection at checkout without relying on a third-party insurer. It’s a good option if you want more control over how claims are handled. You set your own claim rules, customize pricing, and keep the collected protection fees (which can add up).
3. Shipcheck
Next, Shipcheck. It helps you create your shipping protection program. You control how much to charge and how to manage lost, stolen, or damaged packages. You can offer protection at checkout or in the cart, and here’s the interesting part.
That means you keep 100% of the shipping protection revenue.
4. Guide Shipping Insurance
Guide Shipping Insurance gives your customers a simple way to protect packages at checkout.
It focuses on smooth integration with Shopify’s checkout tools and handles replacements directly. Guide approves most claims quickly, which can keep your support workload lighter (always a plus for store owners).
5. ShipPro Shipping Protection
Last one on the list is ShipPro. Like app #3, it lets you offer shipping protection while keeping 100% of the added revenue.
You can charge a percentage of the order total and customize how protection appears. Plus, it works with all major Shopify themes and offers pre-tick options to help boost conversions.
What to Consider When Choosing a Shopify Shipping Protection App
Sadly, if you search online, you’ll see customers who don’t believe in shipping insurance.
This happens when store owners choose the wrong protection app, and customers get burned by poor service or denied claims. You don’t want your customers to have that experience.
You can use these questions to find the right shipping protection app for you:
- What’s covered and what’s not? Make sure the app clearly explains coverage details. Vague terms like “shipping issues” don’t help when customers need to file claims.
- How long does claims processing take? Some apps promise quick resolutions but take weeks to process claims. Check average processing times and read reviews from other store owners.
- Who’s backing the insurance? Research the insurance company behind the protection. Look for established insurers with good track records, not unknown startups.
- What’s the pricing structure? Compare pricing models and see how many carriers each app works with. For example, ParcelPanel integrates with over 1,400 carriers worldwide, giving you more shipping options.
- Can customers talk to real people? Make sure there are actual claims specialists available to help resolve complex shipping issues, not just automated responses.
Your Next Step
Now that you understand what shipping protection is, it’s time to get up and take action.
Remember to consider your product type, shipping volume, and how often you deal with damaged or lost packages. That way, you can decide which shipping app to get.
Ready to offer shipping protection without getting your hands too dirty? Try ParcelPanel’s shipping protection feature.
FAQs about Shipping Protection
1. Should I pay extra for shipping protection?
Yes, if you’re buying expensive or fragile items. Protection costs less than replacing lost packages.
2. Who pays shipping insurance?
Usually, the sender (store owner) pays for basic shipping insurance. Customers pay for additional protection coverage.
3. Is package protection needed?
Yes, especially for expensive, fragile, or unique items. High-volume stores and electronics also benefit from protection.
