ConsumerWatch: UPS Customer Caught Off Guard By 'Insurance' Claim Denial

SAN FRANCISCO (KPIX 5) - Byron Gee of San Francisco thought he did everything right when he recently shipped two headlights cross-country via UPS. The San Francisco chef re-packaged the headlights in their original boxes and added extra newspaper for cushioning. He made sure there was foam covering the edges of the headlights so they wouldn't scratch. And when the clerk at his local UPS store asked him if he wanted to pay extra for "insurance," Gee said "yes."

"I felt like everything was covered," Gee recounted.

But when one of the headlights arrived at its destination broken, Gee found out the hard way that what he thought was insurance was actually a far different product called "Declared Value Coverage."

Declared Value Coverage is UPS's maximum liability if the item is lost or stolen, according to UPS store spokesman Brandon Olson. And Joe Ridout of Consumer Action said consumers are often disappointed when they file a claim.

"Consumers unfortunately get a really nasty awakening to how inferior Declared Value Coverage is compared to real insurance," Ridout told ConsumerWatch.

"With Declared Value Coverage, you've got to establish that their negligence caused the loss or the damage," Ridout said. More details are spelled out on the back of the UPS store receipt, in small, pale gray type over a yellow background. "Declared Value Coverage will be available only if you have complied with Declared Value Terms and Conditions," it reads. Those terms and conditions are further explained in a 42-page document on the UPS website that indicates packages must be packed to UPS standards. Further explanation of those packaging standards are explained on the UPS website.

A standard that catches some customers by surprise, according to Ridout.

"We have heard from many consumers that have heard from UPS that because the packaging was not sufficient that UPS would not pay the claim," Ridout told ConsumerWatch.

That was the reason Gee was given for his denial.

"I don't know how much better I could have packed it," Gee said. His package did contain wadded-up newspaper, a no-no according to UPS's packaging standards.

Still, Gee is angry the UPS clerk originally offered him "insurance."

"I thought I got insurance and I'd be fine," Gee told ConsumerWatch.

ConsumerWatch producers mailed packages at three UPS stores in San Francisco and Daly City and each time the clerk asked them if they wanted to purchase "insurance."

UPS Store spokesman Brandon Olson told Consumerwatch "We train employees to call it Declared Value. Unfortunately, there may be times when an employee thinks it's easier to refer to it as insurance."

Olsen said UPS Stores are now reaching out to their individual franchises to remind them of the difference and instruct employees to offer "Declared Value Coverage."

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