|What does cargo insurance for shipment mean?
Cargo insurance for shipment is the risk management coverage against loss, theft or damage of goods by fire, natural calamities etc., during transportation by road, rail, water and air. Though it is not mandatory to invest in cargo insurance for the shipment, it’s extremely important to insure your products against any unforeseen events, as a damage to the goods would result in a huge loss to the buyer or the seller (whoever takes the responsibility as per their trade agreement). Moreover, the cost of insurance cover is only a fraction of the total value of consignment transported through shipping carriers.
Various types of cargo insurance policies
Marine cargo insurance mainly covers the international transport of goods both by sea and air. The various types of cargo insurance are:
● Open cover policies: This policy is segmented into two types, the renewal policy and the permanent policy. The renewal policy is only for one-way trips and must be renewed for every consignment afterwards. The permanent policy covers the cargo for a limited period of time, allowing multiple shipping consignments within that period of time.
● Specific cover policies: This policy is also called a specific voyage policy wherein the insurer asks the insurance company to provide insurance protection for a specific cargo consignment.
● Contingency insurance policies: In some cases, the buyers are responsible for insurance coverage. There is a chance that the buyer might not have insured the consignment and if there’s any damage to the goods during shipment, they might refuse the consignment. In the case of denial of liability by the buyer, the seller is left with legal recourse, which takes a long time, and the chance of winning the case is not very high.
However, the contingency insurance policy helps the seller overcome this in the case of refusal of acceptance by the buyer; one more upside is that it’s a low-cost insurance policy. Also, these insurance policy details need not be shared with the buyer and will act as a cushion for the seller in case of claim refusal by the buyer.
Marine insurance coverage potential
Sea cargo insurance will provide cover for damages due to loading and unloading, accidents resulting in damage of containers, collision and sinking of ships in high seas, sea piracy, hostile weather conditions resulting in damage of goods, fire, lightning, storm, explosion, earthquake, etc. Further, the insurance coverage is extended till the goods reach the warehouse of the customer after unloading from the container.
Exclusion of maritime insurance coverage
The maritime insurance cover is not extended for inadequate and careless packaging, any damage or loss arising out of negligence, shrinkage and evaporation of goods, infestation, mishandling of goods under the influence of alcohol by crew members, rejection by the customs department, arrival delay, loss of profit and banned drugs.
Cargo insurance is an integral part of the import-export business
An import-export business is incomplete without freight insurance as it mitigates the risk of loss in the business transaction from any eventuality during transit. Marine insurance extends an all-round coverage during shipment in the sea. Cargo insurance coverage provides financial stability and prevents business loss to the concerned party.
It is paramount to have cargo insurance for shipment of goods for it gives financial protection against any unexpected losses during sea transit onshore and offshore. In short, cargo insurance provides hedging against any future loss of money in an export-import business transportation phase. Cargo insurance is the strategy of passing on the risk to the insurance companies for a fee.
One stop solution to all your logistic requirements:
ECU360 provides A-Z services for global cargo shipment ranging from quotations, bookings, container availability, sailing and delivery schedule, shipping directives and cargo insurance. For the best and comprehensive cargo insurance quotes contact ECU360.