The declared value on items shipped, along with an accurate description of what is being shipped, serves as a basis for the customs department to impose any duties and taxes. Essentially this means that the declared value and the customs value are one and the same. But there can be a difference between the declared or customs value and the value given for insurance purposes, which must include the cost of replacement, if the item is damaged during shipping.
Customs Shipping Forms
When you ship an item overseas or to another country, the U.S. Customs and Border Protection Agency requires you to fill out a form that includes the shipper and receiver's name and addresses. In the sender information, you must also include a phone number, while in the receiver's area you can include a phone number, email or fax number. At the bottom of the form, is a spot to put in the total weight in pounds and ounces along with the total shipment value. The total shipment value represents the declared or customs value of the shipment.
Customs and Declared Value
While the declared value is the figure used by customs for figuring out tax and duty amounts, sometimes called the customs value, the insurance value may be different. When you pay for shipper's insurance, for example, the price of the insurance is based on the replacement value of the item shipped. While you may have purchased the item at one price, to replace it may cost more or less, depending on the changes in the retail price and its availability.
The declared value of goods filled out on the custom form does not provide insurance in case the item is damaged during shipping. It is just a number assigned by the sender for the customs form. Cargo or freight insurance provides door-to-door coverage of the goods from the time they leave your hands until they reach the buyer. Cargo insurance also reimburses the sender for the full amount insured or the full amount of the invoice, if the goods are lost or damaged. The declared value does not provide any insurance coverage.
Freight and cargo companies carry insurance to protect them against the liability of goods damaged during shipment. While it's a best practice to pay for insurance on goods being shipped, if you didn't get insurance and the item gets damaged during shipment, sometimes you can get reimbursed by the freight company based on the declared value on the customs form. This creates more of a hassle because you'll need to prove the declared value used for customs and work with the freight company to get your money back.
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