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Cargo Insurance and the Reasons to Choose It

Top Reasons to Get Cargo Insurance for Your Shipment

When moving, all your items need to be moved too. Whichever mode of shipment you choose, every option runs a risk of damage.

Also known as freight insurance, this is a special type of policy that is curated for shippers to protect goods being shipped from any kind of loss, damage or theft while in transit. If shipping items; it is always advised to buy this insurance. In this blog post are a few reasons why you should choose cargo insurance.

A Brief on the Different Variants of Cargo Insurance

It is very important to know what the different types of cargo insurance are available. Broadly categorized into two categories, they are:

  • Land Cargo Insurance: Provides coverage for any kind of theft, damage from collision and similar risks while being transported on land. It includes both trucks and rail shipments.

  • Marine Cargo Insurance: Provides coverage for all kinds of damage caused due to loading or unloading, bad weather, piracy, etc. This type is an international policy that covers both sea and air transports.

These two are further divided into different types of policies which include:

  1. Open Cover Policies: If you, as an insurance holder, require coverage against various consignments at the same time, open cover policies are a great option. This provides annual coverage for the companies who are consistent importers or exporters.

  2. Specific Cargo Policies: Covering only specified batches, this policy falls into place when only a singular consignment is concerned.

  3. Contingency Insurance Policies: Applicable only for when the seller is responsible for insurance of the items in shipment, this policy has an extremely low premium rate.

  4. All Risk Policies: This is one risk coverage policy that ensures that all kinds of external factors, barring the items marked in the list of exclusions, fall under it.

  5. Named Perils Policies: This policy only covers a few types of damages. For example, fire, earthquake, derailment, vessel collision or sinking and the like. 

Why Should You Go for Cargo Insurance?

Now that you are aware of the variations of cargo insurance that are available and decided on which one is most suitable, it’s time to go over why you should go for it.

  1. The first reason is potential freight damage. A very common factor these days during shipment, it can be caused due to a lot of factors.

  2. The next reason can be contaminated floors of the shipping truck, wrong airflow settings, wrong choice and poor condition of the container. Shipping the items in the wrong container, overloading, the weight of the shipment not properly distributed, bad stowage is another freight damage.

  3. Organized and pre-planned crimes such as pirate attacks can cause cargo theft during transit Fictitious pickups or identity theft aren’t that uncommon. Non-delivery owing to any reason also falls under this policy.

  4. Loss of cargo can happen due to storms, shipwrecks and other criteria.

Having your cargo insured right from the get-go makes sure that the entire shipment is covered. The kinds of damage mentioned would be compensated by the insurance company, saving you from a huge cost of paying for the lost goods. A marine cargo policy also covers your shipment during the time it is stored at a warehouse before it has left or after it has arrived at the designated port.

Point to Note: Exclusions Under the Insurance

Keep in mind that freight insurance isn’t an all-encompassing policy. There are conditions excluded under the coverage. Such factors are:

  • If you are aware of a port that is notorious for overcrowding and still select it, especially when your shipment is time-sensitive, the damage, if caused, won’t be included.

  • This insurance policy does not cover the loss that is caused by improper packing of the items or when custom officials reject the goods that have been delivered.

  • Certain items might have inherent problems. These include leaking of fuel, temperature being a reason for contamination of the item. Such items are not covered under the insurance policy.

Irrespective of the kind of shipment, cargo insurance is necessary to secure your items while in transit. The next time you think of shipping your goods, make sure you have cargo insurance coverage.

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