Published using Blogger.

Tuesday, April 25, 2006

A well-informed reader explained why FedEx refuses to guarantee the safe delivery of items over $500, as I wrote on Saturday. The explanation is lengthy, legalistic and involves something called released valuation doctrine, but what it boils down to is this: 1. FedEx and UPS receive special legal protection that makes it cheap and efficient for them to insure your package up to that $500 threshold but insane to assume any liability beyond that point. This is because they are "common carriers," and roughly 70 years ago the federal government decided they should be shielded from potential liabilities while having a reasonable mechanism to offer a modicum of coverage up to certain limits. 2. Going beyond the $500 limit is possible, because FedEx could sell insurance provided by another company without waiving its special federal liability protection. But doing so is legally delicate, in part because FedEx would have to become a licensed broker of insurance in each state and comply with local insurance regulations. It is highly likely the online retailer who shipped my package FedEx but wanted it returned via U.S. Postal Service insured registed mail has an insurance policy on its FedEx packages through a company other than FedEx. Obviously it would be onerous for me to acquire such a policy, especially sinced FedEx does not sell it directly, so I was directed to USPS. I am glad I now understand why I can't return products bought online without waiting at the Post Office and wrapping with paper tape. Unfortunately, this does not make me any happier about the situation.

Back home