Close the Gap with Last Mile Precision | Call Us Today:
(866) 569-1445

Last Mile Delivery Insurance: How It Can Save Your Business

July 25, 2023 | By Jacob Lee
Last Modified: September 28, 2023
From coverage details to cost factors, our comprehensive guide on last mile delivery insurance provides everything you need to know. Give your goods the protection they need.

Last mile delivery insurance plays an indispensable role protecting freight during the final leg of the shipping process. As goods make their way from a transportation hub to the customer’s doorstep, they’re often at a heightened risk of damage or loss. This is due to unpredictable scenarios that can occur when this service is performed.

According to the American Trucking Associations (ATA), last mile delivery insurance provides essential protection for goods in the final stage of transport. It covers:

  • Loss
  • Damage
  • Theft 

There are many factors that affect insurance rates like distance and cargo type. The claims’ history of a business can also be a factor in pricing. 

Learning about last mile delivery insurance is important for shippers of all varieties of freight. Before using this service, learn how you can stay protected.

What Is Last Mile Delivery Insurance?

Last mile delivery insurance is a specific type of coverage designed to protect goods when they’re transported from the distribution center to the final destination. Many shippers choose to get coverage for their freight throughout the transportation process. 

Even during last mile delivery, there’s still the chance that freight can be damaged and lost. Therefore, businesses decide to get protection for their goods before they’re transported to their storefront or to a customer. 

A delivery driver carrying a damaged box

Why Is Insurance Needed for Last Mile Delivery?

Last mile delivery takes up a small portion of the shipping process. That said, there are still many risks and uncertainties that threaten freight. 

This includes:

  • Traffic accidents
  • Poor handling
  • Weather

There’s the possibility a delivery vehicle transporting a shipper’s freight could be damaged in an accident. Trucks often have to travel through busy urban and suburban areas where traffic accidents can occur. Locations like these can impact the well-being of freight. Last mile insurance coverage can also protect any shipments that are lost in such cases. 

Poor handling, even something as simple as dropping a package during loading or unloading, can hurt the item(s) inside. Mishandling cargo could also cause freight to be loaded on the wrong vehicles and sent to an incorrect destination. This can result in lost freight for a business or their customer. 

Shippers should be aware of how weather can harm their last mile deliveries. Rain and snow could potentially soak packages if they’re not protected. Delivery vehicles keep packages safe, and most drivers will try to place items somewhere dry on a customer’s property. However, there’s still a chance weather could ruin a package and the goods inside.  

Freight is most vulnerable during the last mile. Having a robust insurance policy specifically crafted for this stage can help businesses safeguard against unexpected financial losses and ensure customer satisfaction.

Learn more about last mile delivery problems with our article on the topic.

How Much Does Final Mile Delivery Insurance Cost?

There isn’t a set amount for last mile delivery insurance coverage. However, businesses can expect to a pay an amount within a range set by the policy they choose and the goods in their shipment. 

The rates for last mile delivery commercial insurance are typically around 1% to 2% of the declared value of the cargo. To show how these rates are calculated, we’ve included some examples.

Calculating Last Mile Delivery Insurance

RateCost of ItemCalculationCost of Insurance
1%$200200 × 0.01$2
2%$200200 × 0.02$40

Provided with Angies List

The cost we used for our data example is how much businesses can expect to pay to ship an appliance. Refrigerators and similar items are often transported using last mile delivery, which makes this a good example reference. Essentially, all a shipper needs to do is turn their rate percentage into a decimal and multiply it by the declared value of their freight. This will reveal the total cost of their insurance. 

Our article on last mile delivery best practices can help you make your shipments as successful as possible.

Factors Influencing Last Mile Insurance Rates

Final mile delivery insurance prices can fluctuate greatly. Providers determine how much they’ll charge by calculating premiums based on the perceived risk associated with a specific delivery operation. 

Some of the factors they consider include:

  • Mileage driven
  • Trips provided
  • Cargo type
  • Claim history

After careful consideration of these factors, last mile insurance providers will provide a business with a rate. 

1. Mileage Driven

While the final mile is the last part of the shipping process, the distance a delivery truck travels can sometimes be exceptionally long. Costs will rise the farther away a shipment of freight is transported.

There are three variations of last mile delivery, such as:

  • Local
  • City-wide 
  • Regional 

Local deliveries have a relatively low mileage. Since the distance covered is small, the chances of incidents like accidents or cargo damage are less likely. The amount of fuel spent transporting the cargo is much less as well. Therefore, last mile insurance coverage is cheaper in local destinations.

A furniture store delivering products across a bustling city requires trucks to travel farther. The greater distance, combined with heavy traffic and potential for more stops, increases the likelihood of incidents. City-wide delivery also burns more fuel, which raises insurance premiums.

Finally, regional deliveries will have the highest insurance rates due to the significant distances that must be travelled. The great amounts of travel and varied road conditions substantially increases the risk of incidents. This results in an expensive last mile delivery insurance rate.

2. Cargo Type

The type of cargo that a business transports during last mile deliveries also have a substantial impact on a shipper’s insurance rates. 

Providers sort cargo into three categories: 

  • Low-risk
  • Medium-risk
  • High-risk 

Low-risk goods are items less likely to be damaged during transit. Therefore, insurance premiums would typically be lower. Non-perishable items are a good example of this kind of cargo. 

Medium-risk items are more valuable and could potentially be damaged in transit. These shipments consist of items like appliances. High-value or delicate goods pose a higher risk, which result in more expensive last mile delivery insurance premiums.

Goods that fit into this category include:

  • Electronics
  • Artwork
  • Jewelry 

Businesses must protect items like these from potential dangers during the shipping process. 

3. Claims History

Another crucial factor in determining your last mile delivery insurance rates is a business’s claims history. Companies that have filed a large amount of insurance disputes in the past will likely have to pay higher premiums. 

This is because a greater number of claims often signals to insurers a higher level of risk. On the other hand, shippers that have a lower history or none at all are more likely to get a cheaper rate. 

Read our article on the challenges of last mile delivery and how you can overcome them.

Secure Your Deliveries With Insurance From USA Last Mile Logistics

USA Last Mile Logistics can transport your freight for the final part of the shipping process. Our reliable network of carriers has years of experience and will handle your shipments with the utmost care. Our services are available all over the country. 

If you’re ready to transport your freight with USA Last Mile Logistics, then fill out your quote today. You can also contact our team at (866) 569-1445 for more information or questions that you might have. 

Leave the first comment

Get Your Money Back – Guaranteed!

We want to be your last mile shipping partner.

We know the process and requirements can be confusing, but it doesn't have to be.

We can help.

So when ordering a product from our site, you will be happy to know there is no risk in choosing the “wrong” product. We have you covered. In the unlikely event, you select the wrong product, we can help. Our team can help navigate the proper purchase and refunds.

As long as you haven't had your consultation session, we can provide a refund for those products minus a service fee of $45.