MSE Guide: Parcel Protection Insurance

MSE_Rosie

This is the place to discuss our new Parcel Protection Insurance guide. 

We'd love to hear your thoughts, personal experiences, and general feedback. 

If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.

born_again

Does any delivery company offer Actual Insurance (regulated activity) or are you talking about their Compensation?

Adding Insurance into article is only going to confuse people. Think it is like Home or car insurance.

Perhaps remove "Insurance" & stick to parcel protection 👍

Okell

@MSE_Rosie -  you should look at the two County court decisions mentioned in this thread.

Couriers, lost parcels and unfair terms — MoneySavingExpert Forum

They don't create a precedent but they demonstrate how two different judges have approached "lost parcel" claims

the_lunatic_is_in_my_head

For Parcelforce booking on the Parcelforce website gets you £150 cover as standard where as on Parcel2Go cover is either zero or £20 and standard as the price of the basic booking is pretty much the same, always worth looking at the courier site directly.

Also the best tip to avoid a headache is to use a service that meets your requirements, if you send a £1000 laptop with Evri and it goes missing you'll be kicking yourself you didn't pay a bit extra to use Royal Mail Special Delivery to begin with. 

@MSE_Rosie As above it's not insurance  

AstonomyDomine

born_again said:

Does any delivery company offer Actual Insurance (regulated activity) or are you talking about their Compensation?

Adding Insurance into article is only going to confuse people. Think it is like Home or car insurance.

Perhaps remove "Insurance" & stick to parcel protection 👍

born_again said:

Does any delivery company offer Actual Insurance (regulated activity) or are you talking about their Compensation?

Adding Insurance into article is only going to confuse people. Think it is like Home or car insurance.

Perhaps remove "Insurance" & stick to parcel protection 👍

the_lunatic_is_in_my_head said:

For Parcelforce booking on the Parcelforce website gets you £150 cover as standard where as on Parcel2Go cover is either zero or £20 and standard as the price of the basic booking is pretty much the same, always worth looking at the courier site directly.

Also the best tip to avoid a headache is to use a service that meets your requirements, if you send a £1000 laptop with Evri and it goes missing you'll be kicking yourself you didn't pay a bit extra to use Royal Mail Special Delivery to begin with. 

@MSE_Rosie As above it's not insurance  

sorry, but it probably is "insurance".

It doesn't need to be called "insurance" to be an insurance product. And also being regulated doesn't make it "insurance".
Being unregulated makes an insurance an illegal product – and as such it would be unlawful to offer it.

If it is regulated then it could be authorised – and of course it could be exempt but this would have to be something that has been categorised by the FCA.

Parcel delivery "protection"/"enhanced compensation" what have you meets the requirements of an insurance product as set out in  Prudential Insurance Company v IRC, (1904) 2 KB 658

Following from this, the Supreme Court in 2011 held that extended warranties are "insurance" products and therefore must also be regulated under the FMSA.
Re Digital Satellite Warranty Cover Limited

It seems pretty clear that the parcel delivery companies enhanced protection schemes are in fact a form of insurance and it is unregulated.
The principal defence to the charge of selling unregulated insurance is that the company exercised due diligence.
I take this to mean that the company sought and received professional advice that the product they were selling was not insurance and did not need to be regulated.
In that case, they will be in the clear even though the advice might be wrong.

I don't imagine for a moment that they have exercised due diligence.

I also think that it is significant that they strenuously avoid using the term "insurance" in all of their websites.
I think they are well aware.

In any event, whether or not it is a regulated product, it is still an attempt to introduce a secondary contract into the principal parcel delivery agreement and which is calculated to exclude or limit liability – and this is contrary to section 57 and also section 72 of the Consumer Rights Act 2015.


You should realise that the parcel delivery insurance product is money in the bank.

It doesn't need much in the way of logistics. It doesn't need warehouses, collections, deliveries, routing to the correct destination blah blah blah.
Parcel delivery insurance simply needs a computer to receive the money and then to store it away in the bank and occasionally pay out for a lost or damaged or stolen parcel.

I believe that according to Evri's own figures, about only 2% of the proximally 700 million parcels that they claim to be delivering per year actually go wrong.
I don't know how many of their total parcel deliveries are insured. If we go very conservative and say that maybe 60% of them are insured at an average of, say, £5 per parcel.

If we are very kind to the parcel delivery companies and say that all of those 2% were insured and if we are even kinder to the parcel delivery companies and say that they paid out and all of those 2% of parcels – you are still left with many billions of pounds profit – on a product which is prohibited under the Consumer Rights Act and also which is probably unauthorised/unregulated.

If you still disagree that these protection products are likely to be insurance – then it would be interesting to see what authority you have to rely upon to support your position.
And of particular relevance, it will be interesting to learn whether you believe that these insurance products are actually enforceable and not contrary to the provisions within the 2015 Act which make any contractual provisions which seek to limit or exclude liability unenforceable.

AstonomyDomine

Sorry, correction to the above
And also being unregulated doesn't make it "not-insurance".

the_lunatic_is_in_my_head

AstonomyDomine said:

I don't know how many of their total parcel deliveries are insured. If we go very conservative and say that maybe 60% of them are insured at an average of, say, £5 per parcel.

If we are very kind to the parcel delivery companies and say that all of those 2% were insured and if we are even kinder to the parcel delivery companies and say that they paid out and all of those 2% of parcels – you are still left with many billions of pounds profit – on a product which is prohibited under the Consumer Rights Act and also which is probably unauthorised/unregulated.

Parcel cover is certainly a money spinner for the courier companies, it's expensive for what it is, there's a no post list as long as your right arm, a no cover list as long as your left arm, I'd imagine most clams for damaged parcels are dismissed as not sufficiently packaged (that point is probably valid in most cases) and that the couriers dig their heels in for clams on misdelivered parcels in the hope the customer goes away but I think the above is flawed. 

A lot of courier companies are offering basic cover in the price, Evri is £20 as standard for example.

I highly doubt many people actually pay for the extra cover, either they know what they are doing and use better services where the base price covers to the value of the goods, they have absolutely no thought about the matter whatsoever and just post the stuff or even for those that give it a thought it's quickly dismissed as who wants to pay an extra fiver over the base price. 

People sending regularly, say as a business, are better off self insuring by putting a £1 coin in a tin on each parcel and covering losses from that, most B2B contracts will likely exclude cover any way or perhaps for the very large, such as Amazon, offer a set amount of no questions asked claims paid. How many of Evri's 700 million parcels were sent by consumer's ponding over whether they should pay an extra fiver or not? 

I highly doubt the volume of people who actually pay the extra is earning billions, in the single, let alone plural.  

AstonomyDomine said:

If you still disagree that these protection products are likely to be insurance – then it would be interesting to see what authority you have to rely upon to support your position.

I'm not a fan of the way the courier industry works, particularly with regards to "cover" and indeed general customer service when things go wrong and I do think there should be greater regulation, if that is in part achieved by their cover being classed as insurance giving the customer the right of complaining to the ombudsman happy days.

However

https://news.resolver.co.uk/package-delivery-insurance-are-you-covered/

Is parcel cover regulated by the Financial Conduct Authority (FCA)?

The FCA’s remit is set by legislation. In 2007, new legislation was introduced that takes parcel delivery firms out of scope of the FCA’s regulation with regard to insurance for the items they transport. 

The relevant legislation concerns ‘freight forwarders’ (companies whose principal business is arranging or carrying out the transportation of goods). These companies are not carrying on a regulated activity where they:

hold an insurance policy for the loss of, or damage to, goods which they transport; and

make available to their customers the right to claim directly against the insurer in respect of loss or damage to those goods.

As a result, delivery companies are unlikely to be performing a regulated activity when they sell parcel delivery cover. This also means that complaints cannot be taken to the Financial Ombudsman Service.

You'd need a test case on that finding against the couriers, the warranty case is clearly different due to the above technicality of the legislation.  

AstonomyDomine

Anyway, the real point of it is that the parcel delivery insurance is not necessary because you are adequately covered by your consumer rights under the 2015 act and not only that The limitation on liability is unenforceable because it is contrary to section 57 and also section 72 of the consumer rights act. 
In other words, the parcel delivery insurance is being misold

martindow

AstonomyDomine said:

Anyway, the real point of it is that the parcel delivery insurance is not necessary because you are adequately covered by your consumer rights under the 2015 act and not only that The limitation on liability is unenforceable because it is contrary to section 57 and also section 72 of the consumer rights act. 
In other words, the parcel delivery insurance is being misold

Hmm, possibly, but there is no case law, I believe, and contradictory interpretations in lower courts.  Assuming you are right, the real issue is enforcement.  Opening a small claims case for a low value (under £100, say, claim) is relatively expensive and not guaranteed to be successful.

AstonomyDomine

There are at least three County Court judgements in which the judges have each agreed that the attempt by the parcel delivery companies to exclude or limit liability and to sell their insurance product in order to extend liability is unenforceable.

Of course these are only persuasive but they are consistent. It was opened in the parcel delivery companies to appeal if they wish to – and they didn't. They simply paid out.

There are also hundreds of cases which have gone to mediation on exactly the same issue and the claims in those cases have also relied on the unenforceability of the insurance requirement and have also proposed relying on the County Court judgements.

In every case, the parcel delivery company has settled.

The parcel delivery companies have had ample opportunity to produce opposing decisions. They did actually tell Times journalists that they had County Court judgements in their favour but when they were asked to produce the judgements they declined to do so.

The which magazine legal team agreed that section 57 of the consumer rights act has the effect of rendering unenforceable parcel delivery insurance schemes.

A small claim for a low value – say, under £100, is relatively inexpensive and pretty well guarantee to be successful.

Are you saying then that the new MSE parcel delivery guide is wrong? Are you saying that the Which? Consumer Association lawyers are also wrong?

Are you saying that the three County Court judges (four actually but one is missing a transcript) are also wrong?

Are you saying that the parcel delivery companies would settle at mediation even though they are right and everybody else is wrong?

AstonomyDomine

martindow said:

AstonomyDomine said:

Anyway, the real point of it is that the parcel delivery insurance is not necessary because you are adequately covered by your consumer rights under the 2015 act and not only that The limitation on liability is unenforceable because it is contrary to section 57 and also section 72 of the consumer rights act. 
In other words, the parcel delivery insurance is being misold

Hmm, possibly, but there is no case law, I believe, and contradictory interpretations in lower courts.  Assuming you are right, the real issue is enforcement.  Opening a small claims case for a low value (under £100, say, claim) is relatively expensive and not guaranteed to be successful.

I have just noticed that you say that there are contradictory interpretations in the lower courts. Please could you let us know what they are. It is very important to know this.

In the meantime, I originally pointed out that there were three judgements at least in the county courts which all concurred that parcel delivery insurance is unnecessary and unlawful.
I can now tell you that there are six judgements.

I think we need to know which your contradictory judgements are please.