Will insurance cover property lost by USPS?

Coverage Q&A: The insured's business sends packages through the U.S. Postal Service.

The USPS lost the insured’s package while it was in transit. (Photo: Diego M. Radzinschi/ALM)

Every claim is different, and some insurance policies can be difficult to interpret for unique situations. FC&S Expert Coverage Interpretation, the recognized authority on insurance coverage interpretation and analysis for the P&C industry, makes it simple to find credible answers to your complicated coverage questions. Analysis brought to you by our FC&S experts.

Question: We have an insured who is in the wholesale business of distributing medications and utilizes the USPS to ship packages to customers. One invoiced shipment included medication packaged in three different boxes. All three boxes were invoiced and picked up by USPS on the same day. Only two of the boxes arrived. The USPS has no tracking to identify the missing package’s whereabouts.

The insured’s property policy contains the following exclusion: “shortages of property where there is no physical evidence to show what happened to the property.” Does this exclusion apply to this loss?

— Michigan Subscriber 

Analysis: Commercial property coverage can cover an insured’s building and contents, and, in some cases, will cover property while in transit. It is important that an insured keep accurate records of property in event of a loss so any loss may be verified. Even then, there may be certain loss situations that are not covered under the standard commercial property coverage, and the policyholder may need to supplement the coverage with alternative methods and loss prevention.

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