Shipping goods comes with risk; damage, non-delivery and theft among them. Cargo insurance provides a high level of protection against risks beyond the capacity of carriers. It is important to buy cargo insurance to set you up for compensation in the event of damage to or loss of your goods during air, sea and rail shipments. Here, you will learn about cargo insurance and how it benefits shippers.
What Is Cargo Insurance?
Cargo insurance is the most common method of protecting valuables from theft, physical damage and other accidents while in transit. It is not automatically included for all shipped goods and varies by location. You can buy cargo insurance policies suited to your needs from freight forwarding companies; these cost only a fraction of the total value of your goods. To insure complicated or unusual items, consult a specialized cargo insurance firm.
Types of Cargo Insurance
Cargo insurance can be used for both domestic and international transportation, although cooperation from states and countries is essential for its standardization and control. Cargo insurance can be categorized into the following types:
Land Cargo Insurance
This provides coverage for all land transportation via trucks and other small vehicles. That includes physical damage, theft and other related hazards. As land cargo insurance is domestic, it mainly operates within national boundaries.
Marine Cargo Insurance
This is the oldest form of insurance and covers transportation by air or sea. Marine cargo insurance mainly covers international shipping. There are a variety of coverage options to meet your needs. The ‘all risk coverage’ clause covers all packed goods and includes damage, breakage, loss and theft. The ‘total loss coverage’ clause covers physical loss or damage caused by explosion or fire, the collision of vessels and overturning of land conveyances. Consult the professionals to ship your high-value cargo and choose a marine insurance coverage suited to your needs.
Key Benefits of Cargo Insurance
Cargo insurance covers goods transfers carried out by air, rail, water, land and courier. Here are some of the major benefits of cargo insurance:
All Risk Coverage
‘All risk coverage’ protects your valuables against loss or damage caused by external factors during transit. Under this policy, infestation, cargo abandonment, customs rejection, employee dishonesty and damages caused due to improper packaging are covered.
Free of Particular Average Coverage
The ‘free of particular average’ clause eliminates liability for partial losses, except those caused due to burning, collision, sinking and stranding. One of the most favourable clauses to the shipper is that they are not liable to pay for minor losses and only need to pay in case of massive losses. This insurance coverage risk is a specialized category and covers certain risks, including collision, heavy weather, sinking, derailment, non-delivery, theft, earthquake and fire. Coverage depends on the storage place of the cargo.
General Average Coverage
In marine cargo transfers, general average coverage is a primary requirement. This policy covers only partial loss caused to the shipment. According to this policy, all other cargo holders on the ship are liable to pay compensation to the cargo owner exposed to danger.
Warehouse to Warehouse Coverage
This clause applies when the shipment is unloaded from the ship and then transported to the customer’s warehouse. Under this policy, insurance companies are very specific regarding the compensation of only cargo insurance holders; they do not compensate for the cargo of other owners.
Why Do You Need Cargo Insurance?
Here are a few reasons to get cargo insurance:
Cargo is often damaged during shipment. To prevent this, many shippers block and brace their cargo. But there is no guarantee that such preparation will avoid damage. While cranes can drop containers, trucks can have accidents. Your shipment could meet natural calamities like tornados. A cargo insurance can save you from liabilities related to such potential threats.
Theft causes huge losses to shippers. This makes it necessary to insure your cargo. Insurance permits you to ask for refunds or compensation if any damage or accident related to theft occurs to your goods during transit.
Limited Carrier Liability
As per the law, carriers are not responsible for damage to cargo that occurs during transfer. Their liability is limited either by law or contract. You should never rely on your carrier to cover damage or losses that may occur during shipment. Limited liability provides low security to your valuables during transfer. To add optimum security to your precious goods while transit, get cargo insurance.
Natural disasters can occur at anytime. A sudden calamity at sea, for instance, can cause your entire shipment to disappear under the waves. Such traumatic incidents cause severe financial losses to shippers.
The general average is an international principle that states that all parties are equally responsible for sharing losses if any accident occurs to the containers. Cargo insurance will save you from bearing all the losses related to the shipment alone. Without insurance, you may need a cash deposit to release your cargo, even if it is intact; with insurance, the release of your cargo will happen relatively quickly.
Hopefully, this blog helped you learn the essential facts about cargo insurance. To protect yourself against natural disasters, theft and other accidents, purchasing this insurance is advisable. By doing so, you provide the ultimate security to your goods during shipment and assure your peace of mind.