Insuring deliveries against porch pirates requires some surprisingly tricky math, but one founder says he's figured it out

• More than 58 million Americans have had packages stolen in the past year, per a recent survey.
• Now, one startup is launching a service to insure against porch pirates.
• PorchPals founder James Moore explains the surprisingly tricky math needed to solve the problem.

Following the largest day of online shopping ever on Cyber Monday, hundreds of millions of packages have by now reached doorsteps across the US.

But an untold number of those deliveries have also likely found themselves snatched up by someone other than the person to whom they belong.

Now, one startup is launching a service to insure shoppers against these so-called porch pirates.

"We want our service to be used by the consumer when they need us," PorchPals CEO James Moore told Business Insider, "You know, when those Christmas gifts get stolen, that or that Xbox, or that PlayStation, or that pair of Nikes that cost you $300."

The service, which officially goes live on Monday, covers up to three stolen packages a year or a maximum claim of $2,000 for an annual fee of $120. Customers link their payment card to the service and all future e-commerce purchases made with that card are covered, the company says.

As with any insurance product, there is some surprisingly tricky math that goes into putting a tidy number on such a messy problem like parcel theft.

Moore told BI that PorchPals used three separate actuarial teams working independently on the problem to reach a comparable risk profile. The teams represented some industry heavy-hitters, including Lockton Re, Pinnacle Actuarial Resources, and PorchPal's underwriters at Lloyds of London's Newline Syndicate.

Over the past year, more than 58 million Americans are estimated to have had one or more packages stolen, according to a recent survey from tech reviews website Security.org.

Of course, some households experience multiple thefts, and PorchPals estimates the number of stolen packages at around 119 million last year.

In an earlier trial in California, Moore said PorchPals users typically used the service for packages worth between $250 and $280. That figure represents an unfortunate sweet spot in the world of missing parcels: Shipments worth $2,000 or more tend to require a signature at delivery, and refunds for less than $50 can often be processed without too much hassle by retailers who want to keep their customers happy.

Once the value gets above a hundred bucks, police reports and other documentation can start complicating the picture.

The Security.org survey found the median package value that customers reported to law enforcement was $195, while the median value of unreported packages was $50.

Those higher-value losses can lead to a loop of calls to retailers, delivery companies, local police, and back again.

"At some point you've called everybody," Moore said.

Moore said shoppers may not realize how impractical other forms of protection really are in the case of package theft. For instance, homeowner and renters insurance policies typically have higher deductibles than make sense for a $250 claim. Credit card policies can have requirements that packages be reasonably protected against theft, he said.

From a risk perspective, Moore said the nature of package theft makes it different from other property crimes, such as how ZIP code crime rates can affect auto insurance premiums.

"It's not the ZIP codes that you'd think," he said. "In porch theft it's different. The thief is looking for high-dollar items."

Porch pirates may steal from all income levels, but Moore says some of the more expensive packages are snagged from wealthier doorsteps that might otherwise have "this aura of safety," such as gated communities or luxury condos with a concierge desk.

"The number of packages just sitting out there, just left to the open… I mean, it's vast," he said.