Cargo Insurance: Description Of Cargo Insurance

Your cargo insurance will cover your business and products in the event your shipment suffers loss or damage due to almost anything, including natural disasters and even war. Cargo insurance will cover your goods whether they travel by sea, land or air, and whether they are shipped internationally or domestically. Cargo insurance can also be purchased by freight forwarders; customs brokers; shipping agents; any type of sea, land or air carriers; and warehouse owners.

Cargo insurance is sometimes called freight insurance or marine cargo insurance and there are different kinds of policies to cover different kinds of shipments.

  1. An open cargo insurance policy is for people who ship goods on a regular basis; this policy covers a large range of contingencies. This type of policy also requires an open cover agreement between you and your insurance company. This agreement details the voyage types and destinations, as well as the type and value of your merchandise. All shipments that fall within these agreed-upon conditions will be automatically insured.
  2. Single voyage policy is, as the name implies, for someone who rarely ships goods. It covers you for a specified voyage and for the period from which it leaves you until it reaches your buyer.
  3. Catastrophic, total loss, or all-risk insurance policies will cover you for extreme events including strikes, theft and even the sinking of the ship. Under this policy, you and your insurer can also custom tailor your insurance if you have a condition not covered by any other package.
  4. War risk coverage will cover you in case your shipment is damaged or lost due to the effects of war.
  5. Condition of average or law of general average occurs if your shipment has been thrown overboard in order to save the ship during severe weather. In such a case, the owners of the saved cargo—cargo not thrown overboard—will ‘make good’ and contribute to the reimbursement of losses to the owner of the tossed goods.

Cargo insurance comes in many different forms as there are many different possible contingencies when large vessels and their crew are asked to transport goods through treacherous lands, and stormy seas and skies, and then on to countries rife with war and political unrest. Be sure your cargo is insured before shipping.

Cargo Insurance: Description Of Cargo Insurance

Cargo Insurance: Importance Of Cargo Insurance

Shipping cargo internationally and even domestically can be fraught with danger. It is extremely important to insure your shipment as it can be damaged in a multitude of ways. Cargo insurance covers a much larger range of contingencies than most other types of insurance.

  1. Shippers sometimes make the assumption that the carriers (companies that own the boats, planes or trains) are responsible for cargo. Carriers are liable for only a very small number of mishaps. Cargo insurance will protect you much more thoroughly.
  2. Poor refrigeration resulting in the spoilage of your food or plant product can create large business setbacks. There is a refrigeration insurance clause that can be added to your insurance to cover such a setback.
  3. Shipping containers are lost regularly due to severe storms whether shipping by land, sea or air.
  4. International shipments can be lost or damaged as a result of political unrest and even war.
  5. Shipments both large and small pass through many different hands after it leaves you and before it arrives at its destination. Many circumstances can arise during its voyage including improper stowage, employee carelessness, theft, misdirection, improper labeling, and so on.
  6. A shipment being sent overseas can suffer damage or loss from the many issues that plague a large vessel: issues such as hull or mechanical defects, water damage, collisions, stranding, explosions, burning and even sinking.
  7. In long-distance shipping, possible regulatory breaches are possible. Your shipment can be interrupted for not meeting the customs, pollution or safety regulations of other states or countries. Your insurance can cover the fines incurred.
  8. Fraud and forgery of shipping documents, credit cards and currency can occur and can affect your shipment’s progress to its destination.

Any of these issues can result in a loss of business income. Having cargo insurance can help you regain lost ground and minimize the negative effect a situation may have caused. Ships sink, airplanes crash and trains derail, whether by nature or human error. Protect your shipments and your business from all contingencies.

Cargo Insurance: Cargo Insurance Rates

Your cargo insurance can save your business from ruin if your shipment is destroyed and you have no other recourse to regain your losses. Cargo insurance rates are reasonable and your indemnity can be substantial.

Domestic cargo insurance rates can cost as little as $0.50 per $100 merchandise value shipped by airplane, $0.55 per $100 shipped by train or truck, or $0.66 per $100 shipped by ocean liner. The amount of insurance you require is calculated by adding invoice and freight costs, and any commissions, to your projected profit, which ranges anywhere from 10 to 25 percent.

  1. Cargo insurance rates will increase if your shipment is being sent internationally.
  2. Greater risks in getting your shipment to its destination will also increase your rates. This includes environments such as remote areas, stormy seas and countries experiencing political unrest.
  3. The type of goods you are shipping can impact your rates. If you are shipping goods under the heading of General Merchandise/General Cargo, such as fabric, books and tools, your rates will be lower. If your goods are in the Automobiles/Motorcycles category, your rates will be higher. If your goods include cell phones, telescopes or other fragile items, your rates will be even higher.
  4. If you have continuous cargo insurance like open cargo insurance, you can submit your shipping requirements on a monthly basis and your cargo insurance rates will be adjusted accordingly. This is an effective way to save money during your business’s slow periods.

Two basic divisions of cargo insurance are contingent and primary.

Cargo Insurance: Importance Of Cargo Insurance

Contingent coverage is sold at a lower rate because it is considered secondary insurance. If your carrier’s insurance denies your claim, then your contingent cargo insurance will kick in. However, if your carrier’s insurance accepts your claim, you will only receive coverage based on your shipment’s weight, not its actual value. Your coverage is calculated at approximately $0.50 to $0.60 per pound and there are many items your carrier does not cover. Primary coverage is slightly more expensive. However you are insured for the actual value of your shipment and your primary cargo insurance bypasses the carrier coverage entirely; so there is no risk having your claim go through your carrier’s insurance.

There are many factors on which your cargo insurance rate is based. So you can customize your cargo insurance to fit your business needs.

© 2018 Copyright | | All Rights Reserved | Terms of Use | About Us | Privacy Policy | Contact Us