How the premium is calculated
Per 100: Premium = Rate × (Declared value ÷ 100), each started 100 counted in full if selected
Flat: Premium = Flat fee
Premium charged = max(Calculated premium, Minimum premium)
Insurance cost = Premium charged + Additional fees
Effective cost = Insurance cost ÷ Declared value
Maximum payout for a total loss = Declared value − Deductible
The "per 100" method is often written as "per $100 or part thereof". With that rule, a value of $850 counts as nine blocks of 100, not 8.5. The checkbox lets you choose either behaviour.
Worked example
Illustrative values only, not a quote from any insurer or carrier:
| Declared value | $850.00 |
| Rate | $1.10 per $100, each started $100 charged in full |
| Blocks of $100 | 850 ÷ 100 = 8.5 → 9 |
| Calculated premium | 9 × $1.10 = $9.90 (above the $3.00 minimum) |
| Shipping cost | $24.00 |
| Total insured shipping expense | $33.90 |
| Effective cost | $9.90 ÷ $850 = 1.165% of declared value |
For low-value parcels the minimum premium usually dominates: at a declared value of $100 the same policy would charge the $3.00 minimum, an effective rate of 3%.
How to read the result
- Estimated premium is what you would pay for cover on this shipment under the pricing you entered.
- Effective cost lets you compare offers with different structures - a percentage policy, a per-100 policy and a flat fee - on the same basis.
- Total insured shipping expense is the number to use in your per-order costs, for example in theShopify profit margin calculator.
Coverage is more than price
Two policies with the same premium can pay out very differently. Before choosing, check what is excluded (fragile items, high-value goods, certain destinations, poor packaging), how much proof of value and condition is required, claim deadlines, whether delays are covered, and how the payout is calculated. This calculator estimates cost only; it is not an offer of cover, and actual coverage and exclusions depend on the insurer and policy.
Methodology
The declared value is converted to cents; percentage premiums are rounded once to the cent, half away from zero. For per-100 pricing the number of blocks is the declared value divided by 100, optionally rounded up to a whole block. The minimum premium replaces the calculated premium when it is higher. The deductible is used only for the maximum payout figure. No insurer or carrier rates are built in.
Frequently asked questions
How is shipping insurance usually priced?
The most common structures are a percentage of the declared value, a fixed amount for every 100 units of declared value (often charged for each started 100), or a flat fee per parcel. Many policies also set a minimum premium per shipment.
What declared value should I use?
Usually the replacement cost or invoice value of the goods, as the policy defines it. Declaring more than the goods are worth increases the premium but not what you can recover, while declaring less can limit your claim.
Is carrier declared value coverage the same as insurance?
Not always. Many carriers include a limited amount of liability by default and sell additional declared value coverage, which is a carrier liability limit rather than an insurance policy. Third-party shipping insurance is a separate product. Terms, exclusions and claim processes differ, so read the conditions of each.
Does the deductible change the premium?
In this estimate, no. A deductible reduces what a claim pays out. Some insurers do offer lower premiums for higher deductibles; if yours does, enter the rate that matches the deductible you choose.
When is it worth self-insuring?
Compare the effective insurance cost with your own expected loss. If you lose or damage 0.5% of parcels with an average value of $80, your expected loss is about $0.40 per parcel. If insurance costs more than that plus a margin for peace of mind, setting aside your own reserve may be cheaper - provided you can absorb an occasional large loss.