When you are shipping goods domestically and internationally, you may come across the term declared value. It is an important concept that directly affects shipping costs, carrier's liability, and the customs duty or tax for your shipment.
What Is Declared Value?
Declared value is the amount a shipper states as the worth of their shipment to the carrier. It is an important aspect that affects the shipping rate and the carrier's liability for loss or damage of the shipped goods. It is important to note that the declared value should be consistent with the customs value used for duty and tax calculation.
Please remember that shipping insurance is different from declared value, as it is a separate service that offers more protection for the shipment.
What Is the Purpose of Declared Value?
The purpose of declaring a value for the shipment is to determine the following:
- The Shipping Rate: The shipping cost increases with the declared value. The carrier charges a fee to cover the risk of transporting the shipment.
- The Liability Limit: The declared value sets the maximum amount the carrier will pay if the shipment is lost or damaged.
- Customs: The declared value directly affects the duty and taxes paid by the importer for the shipped goods. If the value declared is too low or too high, it may cause penalties, delays, or overpayment.
Declared Value vs Customs Value
Although these concepts are one and the same, it is important to note the slight differences. Declared value is the value you claim the shipment to be worth, while customs value is what the customs officer determines the shipment is worth. Often, customs value is determined based on the initial declared value. These two values should always be consistent; penalties and delays can occur if not. Suppose the customs value is lower than the declared value. In that case, it can be considered under-declaration or fraud, or you can face overpayment of duties and taxes when the customs value exceeds declared value.
Minimum and Maximum Declared Value
Different carriers have different policies, it is important to check with them prior to using the service. While the policies vary from carrier to carrier, some common aspects are consistent across most of them:
- Without declaring a value, most carriers limit their liability to $100 per package or pound, whichever is greater. Regardless of the actual value, they will only pay you up to $100 if your shipment is lost or damaged.
- The maximum declared value depends on the carrier, the mode of transport, the destination, and the type of goods. For most carriers, the maximum is $50,000, but only for certain goods and conditions. Some carriers may have lower or higher limits or may not offer this service for some goods or destinations. You should always check with the carrier before declaring a value.
