What is cargo insurance and why exporters and companies do need that?
Running businesses and trading in the modern world is quit different from ancient times. To run a successful business and to participate in the domestic or international trading market all around the world, companies need to pay attention and care of two fundamental issues: networks and freight services.
As the entire world is now connected together with the help of technology, collaborations and communications with different parts of the world, regardless of the distance, has become possible. Delivery of products and services to clients in different parts of the world has become possible thanks to different freight shipping services that international freight forwarder companies provide. Usually a freight forwarder company can guarantee safety of your freights and can be held liable for any types of damages to your goods during the transporting procedure. However, in respect to value of your products and type of your requested freight shipping service, the liability that these companies provide can be limited. On the other hand, several complications during the freight shipping service may occur that can potentially damage your products or cause you financial penalties. In terms of loss or damages of the freight, sometimes the compensation may not even add up to the initial value of the products. In the worst cases, sometimes shippers and companies have to bear the costs of these complications on their own.
One of the best solutions, that freight forwarder companies and insurance companies can provide for these cases, would be freight insurance (or as sometimes it is called Cargo insurance). Cargo insurance, based on type you choose can offer full coverage for your freights. Some of the Cargo insurances offer full-risk-coverage while others offer only partly coverage of your possessions and freight values.
What Is Cargo Insurance?
Having a carrier liability is mandatory for all carriers that participate in delivering goods to different parts of the world. That is a minimum amount of insurance that each carrier should have during the procedure of product transportation and freight shipping services. The carrier liability provides limited and basic product coverage. The latter means that any type of complications, such as acts of war, vehicle accidents or natural disasters that harm your cargo can result in financial problems and affect your business or company. Due to this fact, many shippers request freight insurance, either from insurance companies or from shipping forwarder companies that they work with, to protect their products and freights from damages, theft or loss during the transit. The cargo insurance usually covers freights during their storage, transit and delivery to clients.
In contrast to carrier liability (which is sometimes called as freight liability), cargo insurance has some limitations. The limits and general conditions of cargo insurances are different based on regulations and laws of different countries. As an example, in Unites States of America, freight insurance does not cover all types of complications that can happen to a motor carrier. The latter is fully supported by the common law of this country. Besides, there is no firm standard framework of freight insurance in this country to be used for fully protection of shipments. In addition to conditions above, having a cargo insurance certificate, do not necessarily mean that broker or shipper can claim back all the money from insurance companies. This step usually takes a while and consult with a lawyer or an expert freight forwarder company can solve many issues in this regard.
Cargo insurance coverage can be affected by many different policies. Therefore, finding a cargo insurance which is completely capable of protecting your freight is not an easy issue. Different products and circumstances can be covered and treated differently by cargo insurances, mainly due to the insurance policies. Therefore, a detailed consult with international freight forwarder companies who provide cargo insurances is suggested to companies and shippers. Lawyers and documentation of cargo values are also other steps which can help shippers and companies in protecting their freights in the transit procedure.
A cargo insurance is not only designed for shippers or exporters, but also buyers all around the world can use benefits of this insurance. They can ask freight forwarder companies to apply for a cargo insurance coverage for products that they have bought and therefore they can protect their freights in time of transit.
What does cargo insurance covers?
In general, cargo insurance covers all the risks and complications, such as physical damages or loss of freights, in time of shipment. The latter means that all your freights are under the cover of insurance in time of transit, import, export and even once they are stored in the warehouses. Other complications such as act of war or Terrorism attacks are only covered for the duration of transit by sea or air freight services. All the aforementioned aspects, however are strongly controlled by different policies of your chosen insurance, which could also be different in a particular state or country, based on laws and regulations.
However, there are a couple of cases that freight insurance can not cover. In general, cargo insurance coverage does not include consequential losses, such as those damages that may happen to seasonal goods. These complications can be covered in the insurance certificate under special conditions. Non-fortuitous losses are also another type of complication that is not included in the coverage of cargo insurance.
Although the cargo insurance covers all types of freight services, from sea to air freights shippings, in almost all parts of the world, however there are some geographical restrictions for this type of insurance as well. Each country has its own regulations and lows. Therefore, based on location and conditions, freight shipping risks may be higher or lower in different parts of the world. Consequently, insurance terms and conditions may vary for different countries. War or terrorism in countries are example of such complications. Those trades which are subject to international sanctions may not be covered by cargo insurances and that can cause difficulties for companies and costumers who are working with clients in countries under sanction.
Cargo insurance coverage may not be available in those countries with poor infrastructure or where the theft risk is high. As an example, freight insurance do not cover deliveries to or from certain land-locked countries in Africa. In some countries, corporations with local insurance markets or state insurance is also needed based on policies of cargo insurance to completely cover the freight, as some special regulations and laws may cause complications.
Different types of Cargo insurance
Cargo insurance can cover both domestic and international freight services. Due to the varying nature of this insurance, a proper corporation framework of different countries and states is required for controlling the situation. Based on these variations, freight insurance can be classifies as follows:
Land Cargo Insurance
This type of freight insurance covers all the land transportation which take place using trucks and other similar vehicles. This type of insurance covers complications such as collusion damages, theft and other related risks. Land Cargo insurance usually operates only within the boarders of a country, in other words it is mostly domestic.
Marine Cargo Insurance
This type of freight insurance covers all the freight services which take place in sea or by air. This insurance covers products and means of transportation from damages, weather contingencies, acts of war and other relevant complications. Marine cargo insurance covers international freight services and it consists of policies such as:
- Open Cover Cargo Policies : These policies get activated once client opts for full coverage of products against different consignments. These policies are usually categorized into two main different groups: renewable policies and permanent policies. Renewable policies usually cover voyages or single trip transits. Countless shipments in a specific period of time usually use marine freight insurance with permanent policies.
- Specific Cargo Policies : These policies are usually provided by shipping forwarder companies or insurance companies. These policies are special and can vary based on clients special needs and companies that offer them.
What are the benefits of Cargo insurance?
As mentioned before, freight insurance covers all the freight shipments that take place in water, air, rail and road. Protecting freights is the main goal of this type of insurance. Freight insurance can provide an extensive protection of freights against any types of complications, such as loss or damages of goods. This is usually called all risk coverage; however, one should be aware that policies can affect this coverage in many different aspects. In general, freight insurance can offer all risk coverage in many different aspects, such as: infestation, damages due to inappropriate packing, custom rejection, Employee’s dishonesty and Cargo abandonment.
Freight insurance can offer general average coverage. This is mainly the basic requirement of marine cargo transits. By employing different policies of cargo insurance, you can protect your business from partial or significant lost or damages. Also with Cargo insurance, products can be covered from the time of departure to the time they get delivered to the costumers. The latter means that products are under the insurance coverage till the get delivered to customer’s warehouse.
For detailed information about different policies of cargo insurance and benefits that your company and freights may get from it, it is strongly suggested to consult your case with international freight forwarder companies or insurance companies.
Our services as an international freight forwarder company
Protecting products and freights from natural and human-based complications is an important issue for companies and exporters all around the world. Conducting a good cargo insurance which can potentially cover all the aspects of your freight service and prevents exporters and owners from any financial penalties is an essential matter for those who want to participate in global or domestic trading market. However, conducting a complete and practical insurance is not an easy issue. Various complicated conditions, regulations and policies are involved in between which can cause problems in time of need. Therefore, many exporters and companies pass the procedure of conducting their international cargo insurance to freight forwarder companies that they work with. Those freight forwarder companies in charge also have to take care of various aspects in order to avoid the insurance risks based on probable caveats and clauses.
Along other freight shipping services that we as an international freight forwarder company provide, our company has years of experience in providing freight insurance services and arranging international cargo insurances. Our services can provide full coverage of freights against loss or damages during sea freight shipping, air freight shipping, rail or road freight services. We can also offer insurance coverage for delayed deliveries of those time-sensitive freights.
Our expert team of freight forwarders can help you to analyze your needs for a proper cargo insurance. Our goal is to help your business in choosing the best cargo insurance that can match your needs and freights’ conditions. We can accompany you through analyzing different types of cargo insurances based on your needs as well as policies that can be beneficial for your particular case. We can offer you various types of services that can provide cargo insurance coverage, rather in form of a framework agreement, such as a transport general policy or for individual transports.
Thanks to years of experience and collaborations with different companies all around the world, we can ensure our clients that with our team of experts, they can have the right level of protection for their products, valuable freights and possessions. Our team would take its time to consider each of the assignments carefully and provides facilities to save money on premiums for its clients, too. We assure our clients of full compensated claims, in times of need, regardless of the liability of the carrier. From single transits to worldwide blanket coverage we can help our clients to deliver their products safely.
Choosing the proper cargo insurance is complicated but essential for your company. Our team would be willing to answer your questions, provide you information and assist you to protect your possessions and business.