Lost or damaged parcels: shipping insurance, liability and claims

Read the terms of the service you actually use

The 2026 FedEx Canada Service Guide explicitly addresses declared value and limits of liability without presenting them as insurance coverage. It is a useful example of the difference between a value declared to a carrier and an insurance policy.

Canada Post states that liability coverage varies by service and options. Some services include up to $100 of coverage, while the first increment must be purchased for Regular Parcel. Content and service restrictions still apply.

Also check how compensation is calculated. Selling price, replacement cost, declared value and the amount actually recoverable are not interchangeable. Do not tell your team a parcel is “insured for $500” without understanding what that amount means under the relevant agreement.

Choose protection before dispatch

Group shipments by value, fragility, destination and observed incident frequency. Identify categories that need special review: perishables, liquids, fragile objects, valuable goods or restricted items.

Read the exclusions before purchasing an option. Canada Post publishes guidance on non-insurable contents and related limits. A carrier accepting a parcel does not prove that its contents qualify for every type of damage protection.

For separate insurance, obtain written confirmation of covered products, territories, transport modes, deductible, packaging requirements and beneficiary. If you use a 3PL, check coverage across storage, preparation, transport and returns. Insurance for stock in a warehouse does not establish that its transport is covered.

Keep a usable shipment record

For each order, link the tracking number to the contents actually prepared: SKU, quantity, value and relevant proof of sale or purchase. Keep proof of handoff to the carrier and a record of the options selected at dispatch.

For sensitive products, document the packaging procedure and take photos where justified. A generic product photo does not show how the particular parcel was protected. The evidence required and its cost should be proportionate to the value and risk.

Keep these records in one place accessible to the person handling claims. A file scattered across the store, an email inbox and a carrier account wastes time and increases the chance of missing a deadline.

What to do if a parcel arrives damaged

1. Identify the order. Confirm the tracking number, affected items and type of damage.
2. Request useful photos. The outside of the parcel, label, internal protection and damaged products help document the issue.
3. Ask the recipient to keep the parcel and its contents. The carrier or insurer may require an inspection. Do not immediately instruct them to discard it.
4. Check the service’s procedure. Identify who should open the claim, the documents required and applicable deadlines.
5. Handle the customer relationship. Apply your replacement or refund procedure according to the circumstances and your obligations, keeping that decision separate from the claim outcome.

Canada Post’s damaged parcel procedure requires the original packaging to be retained and provides for the sender to open the investigation. Terms and deadlines vary by service: consult the applicable version as soon as the problem is reported.

What to do if a parcel appears lost

Start by checking tracking, the address and any delivery instructions. A tracking record with no new event does not automatically establish a loss; a “delivered” status may also require investigation of how the parcel was handed over. Open an investigation using the carrier’s procedure.

Our tracking guides for Canada Post, Purolator, UPS and FedEx provide contact points and initial checks. Keep a timeline of communications and case references.

Assign a next action and a follow-up date. When closing the case, compare the amount recovered with actual costs: replacement product, another preparation cycle, reshipping and customer service time. Receiving compensation does not necessarily mean the incident cost your business nothing.

Use incidents to improve packaging

Group damage by product, box format, cushioning material and destination. Repeated damage to the same combination can indicate insufficient separation, poor weight distribution or unsuitable outer packaging. Our parcel packaging guide provides a validation method.

With your order fulfillment provider, define who keeps evidence and who supplies information to the carrier account holder. Agree on these responsibilities before an incident, particularly when the shipping account does not belong to your store.