Table of Contents
- 1 Cargo insurance
- 2 What is cargo insurance?
- 3 Types of cargo insurance:
- 4 Advantages of cargo insurance:
- 5 Cons of cargo insurance:
- 6 When do you need cargo insurance?
- 7 What is not covered by cargo insurance?
When your shipments are in transit, they are exposed to risks that can cause them to be lost or damaged. For example, if the shipment is lost at sea due to the sinking of the container ship, the responsibility of the shipping companies is usually not enough to cover the value of your shipment, for this reason, it is important that you think seriously about insuring your shipments so that you can get the insurance that covers the value of your shipment if it is lost or exposed to any risks, which saves you money and time.
What is cargo insurance?
Insurance on your shipments protects you from financial loss that may result from the loss or damage of the shipment, as the insured amount is paid if anything happens to your shipment. Usually, the events covered by insurance are natural disasters, landfill accidents, shipment abandonment, customs refusal, acts of war, and piracy, and there is a difference between Insurance policies for shipping from one agent to another and from one shipping company to another.
Types of cargo insurance:
Cargo insurance is available for transportation and shipping, whether local or international, and it is difficult to standardize and control insurance coverage, as it may differ from one country to another. The types of cargo insurance include the following types:
1- Land freight insurance:
Land cargo insurance covers both trucks and vehicles traveling by land, and land insurance plans often include protection against damage, accidents, theft, and other risks associated with logistics services. charger needs.
2- Sea freight insurance:
This type of insurance secures both sea and air freight, mainly used for international freight, and covers damages resulting from loading and unloading, weather conditions, piracy, and other damages that may be caused to shipments.
For this type of insurance, there are several insurance policies that cover many situations, as follows:
1- Open coverage:
This type of insurance often covers a fixed period, usually one year, and several shipments can be included in one insurance policy, and this type is an effective risk management tool if you ship frequently, and it has two types:
- Renewable: The document can be renewed after the shipment has been delivered, making it very convenient for individual trips.
- Permanent: The policy can be enforced for a specific period, and unlimited shipments are allowed during this period.
2- One Cover:
Also called a defined coverage policy, it basically covers every shipment identified and is ideal for companies that ship their shipments irregularly.
There are some cases in which the customer is responsible for insurance instead of the seller, and in order for the seller to avoid any risks that occur to the shipment and therefore the customer does not receive it, he makes an emergency insurance policy without informing the seller to use it if the customer fails to secure the shipment.
4- All risks:
This type of insurance covers most of the causes of damaged or lost shipments, provided that the shipment is new and not prone to damage or loss by nature. However, it does not include the following reasons:
- Damage or loss due to natural disasters.
- Loss or damage due to war, strikes, riots, or civil disturbances.
- Neglecting the importer/exporter
- Customs delay and rejection
Advantages of cargo insurance:
The primary benefit of shipment insurance is to reduce financial loss even if the shipment is damaged or lost, as the small insurance premium you pay provides peace of mind that your shipments are insured from any risks, and these advantages include:
- The insurance of shipments ensures maintaining the financial stability of the owners of shipments, as it guarantees financial compensation for its shipment if it is exposed to any kind of risk.
- There are many insurance policies and plans to ensure shipments according to need, shipping methods, and means of transportation
- Cargo insurance covers a wide range of risks
- Cargo insurance covers all modes of transportation.
Cons of cargo insurance:
Although cargo insurance has many advantages, it also has many negative aspects, and these aspects include the following:
- Insurance claims will not be paid on shipments in the event of personal intervention in the steps of their transportation.
- Because of the volume of merchandise involved and the risks involved, cargo insurance can be expensive.
- A rather long time to resolve accidents and insurance problems and recover the amount of insurance.
- It is very necessary to make sure and carefully review the contents of the insurance policy when choosing an insurance company to avoid unexpected surprises.
- The shipping company may not have any choice about obtaining shipment insurance, because most buyers will not accept to deal with a company that operates without shipment insurance.
When do you need cargo insurance?
In general, it is always advisable to get insurance on your shipments even if it is not required by law, as your shipment may be exposed to a lot of risks as it moves through different hands, different trucks, and different ports, there are also external factors such as weather and traffic conditions, So the longer it is exposed to the risk, the more likely it will be lost, stolen or damaged.
What is not covered by cargo insurance?
Cargo insurance does not cover the risks and problems that the shipper often controls, and it is important to keep this in mind to reduce the chances of shipments being damaged or lost. In general, it does not cover the following points:
- Damage due to improper packaging If any damage to a shipment is traced back to the improper packaging of your shipment, the loss will not be covered by insurance in that case.
- Damage caused by defective products, if the carrier can show that the damage was due to defective items inside your shipment, you will not be compensated.
- Certain types of shipping. Some providers do not ensure hazardous materials, some electronic products, and other high-value or fragile products.