Janet,
I would highly recommend adding insurance to all of your higher valued packages. Giving the customer the "option" for insurance will most likely not indemnify you from a chargeback if the package is lost, stolen or misplaced. Also, some customers make be wary of the “uninsured” shipping option and at the same time not appreciate the “extra” charge for insurance. If needed, increasing your shipping cost to $5.49 or $5.95 may cover it for you with the options I've listed below.
As you use USPS I would first recommend shipping all packages with Delivery Confirmation. This is
free if you ship via Priority Mail and print the labels online at usps.com or thru a third-party such as stamps.com or endicia.com.
Second, I would recommend checking out u-pic.com. They have a couple insurance options for USPS packages starting as low as $.40 per $100. Not bad if the value isn't going too high.
A few tips for trying to prevent Mail Theft:• Do not use product or value identifying words in the return address. "Customer Service" is less likely to disappear than a package that indicates "Acme Jewelers"
• Use plain boxes or carrier supplied boxes that do not identify the products. A little box with "Acme Jewelers" stamped all over it could quickly disappear.
• Place all invoices and packing slips inside the package, not in an outside sleeve or envelope.
• Ship using Delivery Confirmation (USPS) or a via carrier with package tracking (UPS/FEDEX)
• Uninsured packages (USPS) that have large values should at least be shipped with "Signature required". This is $1.30 extra for USPS packages, but worth it if your concerned about the package but for whatever reason choose not to insure it.
Now, as for setting it up that way if you still want to...
This is easy if you just use a custom fixed rate right now. Just edit your existing custom method and add "Uninsured*" to the end of the name on it. Then create a new custom shipping method with "Insured*" at the end of that one. Be sure to place a explanation in your customer service section explaining the difference.
Hope this information has helped you out... or atleast someone out there