Can Insurance Help Mitigate Porch Piracy Losses?

With incidents of package theft spiking every holiday selling season, merchants and customers increasingly have options to secure porch piracy insurance to reduce the risk of significant losses.

Capital One statistics show package thefts in the U.S. totaled 119 million in 2023, equivalent to one out of every 180 package deliveries. A recent ValuePenguin survey of nearly 2,050 U.S. adults found that 41% have been a victim of porch piracy, up from 35% in 2022.

Most major carriers include free liability coverage for up to $100, but policies don’t cover stolen packages after they’re delivered.

For online sellers, porch piracy insurance coverage is available from third-party insurance providers, including XCover insurance from insurtech specialist Cover Genius as well as InsureShield, which is part of UPS’ financial services arm, UPS Capital.

InsureShield, which provides coverage for deliveries from major carriers like UPS, FedEx, USPS, and DHL, estimates on its website that, with an average net profit margin of 12%, an online merchant would need to generate $2,500 in new sales to recover from a $300 loss caused by porch piracy.

InsureShield’s marketing copy reads, “Porch piracy protection is an essential safeguard for businesses as well as to their customers. E-commerce businesses that protect their shipments can lower financial losses. This keeps customers loyal and satisfied.”

InsureShield also offers DeliveryDefense, an AI-driven tool that allows merchants to assess the level of delivery risk associated with certain addresses in various regions, thereby determining whether to divert packages to other locations or to purchase shipping insurance to protect against potential losses.

Consumers, many of whom have invested in doorbell cameras, expensive lock boxes, and self-service locker rentals to combat porch piracy, now also have an insurance option. As profiled in a recent Wall Street Journal article, PorchPals, which officially launched nationwide earlier this month, allows online shoppers to pay $120 a year to cover up to $2,000 of deliveries, or up to three claims a year.

Porch theft isn’t covered under standard credit card benefits. While package theft is typically covered by homeowners or rental insurance policies, it’s only helpful for purchases that are worth more than deductibles that typically range between $500 and $2,000. The insurance company may also increase the premium paid on a homeowners insurance policy due to the claim.

Currently, however, many retailers are absorbing the losses from their packages being stolen on front porches and doorsteps. Wall Street Journal reporter Imani Moise, who wrote the article on PorchPals, said on a WSJ Your Money Briefing podcast, “A lot of times the retailer will go ahead and either refund or replace that item because they don’t want to lose a customer.”

Online merchants could encourage shoppers to purchase porch piracy insurance.

Route, a Utah-based startup, enables online merchants to add an option at checkout for online shoppers to purchase package protection against porch piracy. Route, which also supports related claims resolution and package tracking, said adding package protection at the point of checkout “helps drive conversions because it guarantees they won’t be stuck empty handed in the unfortunate case of theft.”

Another option for retailers is not reimbursing or replacing items stolen post-delivery.

A recent survey of 1,000 Americans from home security system company Vivint found that when package theft occurred, the majority of shoppers (61%) reported receiving full compensation from the retailer, with 69% satisfied with how retailers handled their claims. However, 19% reported receiving no reimbursement.