How do I properly issue a refund for PIP insured item damaged during shipping?

[sweetpea_tcg]

A buyer messaged me that an item I sent was Not as Described since it had a tiny rip in the outer packaging that happened during shipping. I immediately refunded them in full through PayPal, letting them keep it for free, and in my selling history the item shows up as refunded. My sales invoice also shows that I was refunded the final value fees (minus the amount I was giving to charity).

But, I paid 3$ for full insurance coverage through the default third party PIP and the claim states that if there isn't a case in the resolution center, they "May" need to email the buyer before paying out. Yikes, sounds like I'll never get my insurance payout.

Am I totally hosed here? Should I have asked the buyer to start a return so it would go through the resolution center? I am a new seller and have been reading horror stories of how the buyer is always right, just refund them in full and move on, and it seemed like eBay encourages sellers to solve problems themselves. So, I thought a quick refund through PayPal would be best... Wouldn't it be annoying to make a buyer go out of their way to start a return?

https://www.ebay.com/help/selling/managing-returns-refunds/handle-return-request-seller?id=4115#refu...

eBay's help page for refunds only has advice for if it is a return.

Did I do the refund correctly? Is paying for insurance a scam since it never pays? I thought the resolution center is only used in escalation if the blessed buyer and cursed seller can't come to an agreement, but should I encourage all buyers to start an official return process to have a better chance at getting insurance payout?

Thanks for reading!

[orangehound · Accepted solution]

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@sweetpea_tcg wrote:

Did I do the refund correctly? Is paying for insurance a scam since it never pays? I thought the resolution center is only used in escalation if the blessed buyer and cursed seller can't come to an agreement, but should I encourage all buyers to start an official return process to have a better chance at getting insurance payout?

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The only way that you'll know if the insurance will pay is to file a claim and see what happens.   If it was one of  the cheap items you sold (under $10), directly refunding is probably the easiest approach ...

There are so many other specific comments I could make, but let me just make some general ones.

1. In general, insurance is a poor use of money.   Your best "insurance" is to pack your products well, with cushioning, and in sturdy boxes with an H taping pattern.  If you are shipping glass, then it can break even with the best packaging techniques, and it can be difficult to get insurance coverage.
2. You can always file insurance claims, but the insurer will often require some evidence of the damage such as (1) photo of package damage; and (2) photo of item damage.  Damaged items without package damage are hard to win.  Your insurance claim is limited to the purchase price on eBay.   For example, if your claim is on this item, then your limit is $50 ... but, it is possible that the "rip" that the buyer mentions was that pre-existing separation of the clear package that you noted.
3. On Significantly Not as Described (SNAD) claims such as shipping damage, some sellers like to do as you did and refund without the buyer opening a claim (because they don't want the SNAD on their history).  Other sellers prefer that the buyer opens the claim through eBay (because they want to get the package back and/or they know that some sellers don't follow through with the return process).   On all of your more expensive sales, I would have required a return before refunding.

[7606dennis]

OP!  Can you explain what you mean by PIP insurance?  I'm afraid that I'm only familiar with that term being used in connection with automobile insurance and standing for Personal Injury Protection?

If you had insurance on the item, you may have been a bit too hasty with regard to refunding and allowing the buyer to keep the item since, the insurer may, want to take possession of the item if they pay the claim.

[sweetpea_tcg]

I meant the default third party insurer when you pay postage through Ebay. I at least have a picture of the rip.

[sweetpea_tcg]

The linked star wars figures were won, but I cancelled after the buyer asked me to retract their bid. I sold another star wars action figures / dolls that got a tiny rip during shipping. The buyer sent me a picture of the damage, but not of the packaging. So I guess I did the refund correctly! Hopefully I get an insurance claim payout, if I do I'll post back here for posterity.

Thank you Orangehound for your advice, and taking the time to look at my items, I appreciate it. In the future I will offer returns on items and attempt to get the item back if it's sealed or expensive before issuing refund, and I will avoid buying insurance on most things.

I was a little worried about people abusing returns, like upgrading their collection by sending back worse condition things after buying mine. But, it seems that is rare and better than getting nothing.

My uncle just passed away and left me all his collectibles, coins, action figures, comics, and hundreds of lawn gnomes. I don't really know what I'm doing, so I'll probably sell most the stuff on consignment locally, and just dump the coins for silver value.