E-commerce Logistics Insurance: Online Retailer Shipping

Introduction: why shipping risk is an e-commerce problem (not just a courier problem)

If you sell online, your customer experience lives or dies in the “last mile”. But the financial risk often sits with you, not the courier. Lost parcels, theft from vans, damaged goods, failed deliveries, chargebacks, returns fraud, and stock held by third parties can all hit cashflow fast.

That’s where e-commerce logistics insurance comes in. It’s not usually one single policy. It’s a set of covers that work together to protect:

• Stock while it’s stored (your premises, a warehouse, or a fulfilment centre)

• Goods while they’re being shipped (UK and international)

• Your legal liability to customers and third parties

• Your ability to keep trading if a major incident disrupts fulfilment

This guide explains the practical insurance options for UK online retailers, what to watch for in courier contracts, and how to set up cover that matches how you actually ship.

What “e-commerce logistics insurance” typically includes

Most online retailers build protection using a combination of:

• Goods in Transit (GIT)

• Stock/contents insurance (including stock at third-party locations)

• Marine cargo insurance (for imports/exports and longer supply chains)

• Product liability and public liability

• Employers’ liability (if you have staff)

• Cyber insurance (for order systems, payments, and data)

• Business interruption (if a fire, flood, or major incident stops fulfilment)

The right mix depends on your fulfilment model: shipping from home, a small unit, multiple warehouses, dropshipping, or using a 3PL/fulfilment provider.

The core cover: Goods in Transit (GIT)

What GIT is designed to cover

Goods in Transit insurance is intended to cover loss or damage to your goods while they’re being transported. Depending on the policy wording, this may include:

• Theft of parcels or cartons

• Accidental damage in handling

• Vehicle accidents

• Fire

• Loading/unloading incidents

Some policies can be tailored for:

• Own vehicles (if you deliver locally)

• Hired-in vehicles

• Courier networks

• Multi-drop routes

• High-value items

Common limitations you need to plan around

GIT is not always as broad as retailers assume. Watch for:

• Single item limits (e.g., £1,000 per package)

• Vehicle limits (e.g., £10,000 per vehicle)

• Unattended vehicle exclusions (especially overnight)

• Theft conditions (forced/violent entry requirements)

• Packaging conditions (insurer may require adequate packaging)

• Proof of delivery requirements

• Exclusions for certain commodities (phones, jewellery, watches, alcohol, cosmetics, lithium batteries)

If your average order value is £250 but you ship occasional £2,500 orders, you need to make sure the policy is built for that.

Why relying on the courier’s liability can leave you exposed

Many retailers assume the courier will “just pay” if something goes missing. In reality, courier compensation is often:

• Capped (sometimes very low compared to your retail value)

• Based on weight or limited “standard compensation”

• Subject to strict claims time limits

• Conditional on packaging standards and declared contents

• Excluded for certain items or delivery methods

Even when a claim is accepted, you may only recover the cost price, not the retail sale price, and you still face:

• Refund obligations to customers

• Replacement shipping costs

• Customer service time

• Reputation damage and negative reviews

Insurance can be structured to cover your insurable interest in the goods and the real-world costs of putting things right.

Stock insurance: protecting goods before they leave (and after they come back)

Shipping losses are only one part of the picture. Many e-commerce claims start in storage:

• Fire or smoke damage

• Flood and escape of water

• Theft following a break-in

• Accidental damage

• Temperature issues (for certain goods)

If you store stock:

• At your premises

• In a self-storage unit

• In a shared warehouse

• At a fulfilment centre

…you need stock cover that includes all locations where your goods are kept.

Stock at third-party premises (3PL/fulfilment)

If you use a fulfilment provider, you’ll often see contract terms that:

• Limit their liability for loss/damage

• Exclude certain perils

• Cap compensation per pallet/carton

You can usually insure stock held at third-party locations under your own policy, but you’ll need:

• The fulfilment address(es)

• Maximum value at each location

• Security and fire protection details

• Confirmation of who is responsible for insurance in the contract

Marine cargo insurance for imports, exports, and longer supply chains

If you import stock (e.g., from the EU, US, or Asia) or ship internationally, marine cargo insurance can be a better fit than basic GIT.

It can cover:

• Sea, air, and road transit

• Port risks and container handling

• General average (shared loss situations)

• Longer storage in transit (subject to terms)

For online retailers, this is especially relevant if you:

• Bring in seasonal stock in bulk

• Use freight forwarders

• Have long lead times and high-value consignments

Returns and reverse logistics: the hidden risk centre

Returns are part of the business model for many online retailers. The risk isn’t just “a parcel went missing”. It can include:

• Returned goods damaged in transit

• Items swapped (returns fraud)

• Missing accessories

• Goods returned outside policy but still received

• Stock becoming unsellable due to packaging damage

Insurance doesn’t always cover “fraud” as standard, but you can reduce exposure by:

• Tightening returns processes

• Using tracked returns labels

• Photographing outbound packing

• Serial number recording (where appropriate)

• Clear terms and conditions

Talk to your broker about what’s realistically insurable and what should be handled via process controls.

Liability cover: when shipping creates legal exposure

Product liability

If a product you sell causes injury or property damage, product liability can respond. This matters even if you didn’t manufacture the item.

Examples:

• A faulty charger overheats and causes a fire

• A cosmetic product triggers a reaction

• A children’s product fails and causes injury

For UK retailers, product liability is often packaged with public liability.

Public liability

Public liability covers your legal liability if your business activities cause injury or property damage to third parties.

This can apply to:

• Customers visiting your premises (if you have a collection point)

• Couriers collecting from your site

• Accidents during local deliveries

Employers’ liability

If you employ staff (including part-time), employers’ liability is a legal requirement in most cases.

Cyber insurance: the logistics risk you can’t see

E-commerce shipping depends on systems:

• Order management

• Payment processing

• Shipping label platforms

• Customer databases

• Marketplace accounts

A cyber incident can stop fulfilment, trigger refunds, and create regulatory exposure.

Cyber insurance can help with:

• Incident response and forensic support

• Business interruption from cyber events

• Ransomware recovery

• Liability and regulatory costs (where insurable)

• Customer notification and credit monitoring (where relevant)

If you’re handling customer data, UK GDPR obligations and reputational risk make this worth considering.

Business interruption: keeping cashflow alive after a major disruption

If a fire, flood, or major incident shuts down your packing area or warehouse, you may still have:

• Ongoing overheads

• Staff costs

• Supplier commitments

• Customer refunds

Business interruption (BI) cover is designed to protect your gross profit during the recovery period.

Key points to get right:

• Indemnity period (how long you need to recover)

• Sum insured (based on realistic turnover and margins)

• Dependencies (e.g., reliance on a single fulfilment centre)

Some policies can extend to include denial of access or supplier/customer dependencies, depending on wording.

Key questions insurers will ask (and why they matter)

To quote e-commerce logistics risk properly, insurers typically want to know:

• What you sell (including any high-risk or restricted items)

• Average order value and maximum single item value

• Annual turnover and peak season volumes

• Shipping methods (standard, next day, international)

• Couriers used and whether you use multiple carriers

• Packaging standards and despatch controls

• Where stock is stored (and maximum values at each location)

• Security measures (alarms, locks, CCTV, access control)

• Claims history (lost/damaged parcels, theft, chargebacks)

The more accurately you describe your operation, the less chance of nasty surprises at claim time.

Common exclusions and claim pitfalls for online retailers

These are some of the most common reasons claims get delayed or declined:

• Inadequate packaging (no internal protection, poor sealing)

• Unattended vehicle conditions not met

• No evidence of forced entry where required

• Late notification to insurer or courier

• Incorrect declared contents/value

• Excluded commodities shipped without agreement

• Poor record keeping (no dispatch logs, no proof of handover)

A simple shipping control checklist can make a big difference.

Practical risk controls that can reduce premiums and losses

Insurers like businesses that can demonstrate control. Consider:

• Using tracked services for higher-value orders

• Setting value thresholds for signature-required delivery

• Tamper-evident packaging and branded tape

• Dispatch scanning (barcode or photo proof)

• Secure “goods out” area with restricted access

• Clear cut-off times and carrier handover logs

• Regular reconciliation between orders, labels, and carrier manifests

• Splitting high-value orders across parcels where appropriate

Even if these don’t always reduce premium immediately, they reduce loss frequency and improve claim outcomes.

Choosing the right structure: three common e-commerce setups

1) Shipping from home or a small unit

Often needs:

• Stock/contents insurance (including theft and accidental damage)

• GIT for courier collections and local deliveries

• Public/product liability

• Cyber cover

2) Multi-channel retailer with a warehouse

Often needs:

• Commercial combined policy (property + liability + BI)

• GIT and/or marine cargo

• Employers’ liability

• Cyber

3) Using a 3PL/fulfilment centre

Often needs:

• Stock cover including third-party locations

• Clear contract review on liability caps

• GIT/marine cargo to cover inbound and outbound shipments

• Cyber and BI, particularly if you rely on one fulfilment site

How to talk to your broker (and what to prepare)

To get accurate cover, prepare:

• A list of products and any “special” items (batteries, liquids, high-value)

• Typical parcel values and maximum values

• Top couriers and shipping lanes (UK, EU, worldwide)

• Storage locations and max stock values per location

• Peak season stock and shipping volume estimates

• Any previous loss data (even informal)

This helps your broker place cover that matches reality rather than a generic template.

FAQs

Do I need Goods in Transit insurance if I use a major courier?

Often yes. Courier compensation is usually limited and conditional. GIT can be arranged to protect your goods and cashflow more reliably.

Does GIT cover international shipping?

Sometimes, but many policies are UK-only unless extended. For imports/exports and complex routes, marine cargo insurance may be more suitable.

Are returns covered?

Returns can be covered for loss/damage in transit if the policy is structured that way, but it varies. Returns fraud is usually a separate issue and may not be insured as standard.

What if my stock is stored at a fulfilment centre?

You can often insure stock at third-party premises, but you need to declare the locations and values. Also check the fulfilment contract for liability limits.

Will insurance cover “porch piracy” or parcels stolen after delivery?

It depends on policy wording and proof of delivery. Some covers stop at delivery confirmation. If this is a frequent issue, discuss options and delivery controls.

Can I insure the retail selling price?

Insurance usually covers your insurable interest (often cost price plus certain costs), but it depends on the policy. Your broker can advise the best structure.

Conclusion: protect the promise you make at checkout

E-commerce customers don’t separate “the courier” from “the retailer”. If a parcel disappears or arrives damaged, they expect you to fix it quickly.

With the right mix of stock cover, goods in transit or cargo insurance, liability protection, cyber cover, and business interruption, you can protect margins, keep customers happy, and scale shipping without taking on unmanaged risk.

Call to action

If you’re a UK online retailer and want to review your shipping and fulfilment risks, Insure24 can help you map your logistics process and arrange insurance that fits how you actually trade.

• Speak to our team for a quick review

• Or request a quote and tell us how you store and ship your stock