Alternative to insurance?

[Brett Schaller]

I've been following some threads here and on other (non-knife) discussion boards on the subjuct of insurance when shipping packages. A common complaint has been that the carrier will use any excuse it can not to pay out a claim.

One technique is requiring the claimant to "prove" the value of the item lost. I doesn't matter if you purchased $400 worth of insurance - before they pay, you must prove the item was worth $400.

Of course, presenting a sales receipt and cancelled check from your customer is not enough to establish "true market value." Some have reported that their claims have been turned down flat because "it is impossible to establish a value on a one-of-a-kind, handmade knife."

Anyway, i"ve been thinking of an alternative to insurance, and I'd like some opinions on it. What I would do is, when shipping a package, I'd look up the amount to insure it for full value on the USPS site and add that amount to the shipping cost to the customer, just as I do now. But I wouldn't actually buy the insurance - instead, I'd deposit the money into an escrow account. Since most packages are not lost, the amount in the account would grow every time I shipped a package.

Eventually, a package will probably be lost or damaged. By the time that happens, I will (I hope) have enough in the account to cover the refund to my customer.

Of course, this is not without pitfalls. If the fourth or fifth package I send out after I start this is lost, I won't have nearly enough to cover it. On the other hand, if USPS fails to pay my claim, I'm no worse off - and at least this way, things will even out eventually.


So, what does everyone think? Is this practical? Ethical? Legal? Fattening?