Getting insurance means protecting your financial investments from risks of damage, theft and loss. It commonly applies to our assets and whatever we consider as highly valuable in our lives – our home, our cars, our health, our pets and our life itself, is also being insured. In business, there are various types of insurance that guarantee risk recovery when accidents happen that will result in loss of stocks, inventories and income. One of these is cargo insurance.
Cargo insurance protects goods and cargoes against damage, theft and unforeseen circumstances like war, fire and natural disasters while these cargoes are in transit. SImilar to what other insurance offers, cargo insurance lets you pay a small amount in exchange of protection and reimbursement of the partial or total amount of the declared value of your goods that are lost, damaged or seized while in transit.
How to Get a Cargo Insurance
Consignors can either get cargo insurance directly from their trusted insurance company or agent but their freight forwarder can also include it in the shipping cost and might turn out to be cheaper than getting it separately.
Types of Cargo Risks
Cargoes can get delayed, damaged and be totally lost in transit through natural causes such as typhoons, lightning, fire, explosion and other catastrophic reasons. According to statistics from the World Shipping Council (WSC), an average of 1400 containers are lost at sea annually. Likewise, inland freight cargoes are also exposed to similar perils on the road.
Loss of goods due to theft can happen either in transit from the warehouse to the port or while being transported from point A and to B. A complete take over of a vessel, truck or aircraft or hijacking can be considered total seizure of cargoes.
Types of Cargo Insurance
There are also types of cargo insurance than extends coverage not only for goods in transit but for goods that are in the container yards awaiting transfer. These are the detailed examples of cargo insurance being offered:
Inland Cargo Insurance
This type of insurance covers goods and cargoes which are usually moved by land via container vans or trailer trucks. Goods under this type of insurance are insured against robbery, hijacking, fire, damage caused typhoons and flash floods, and other acts of nature.
Marine Cargo Insurance
This type of cargo insurance covers inter-island transfers carried by ship or vessel within navigable waters. Marine cargo insurance typically covers cargo damage or loss from perils such as:
- Vessel/ship collision
- Fire, explosion, volcanic eruption, lightning
- Capsized, stranded, overturned or sunk vessel or ship
- Ship hijacking
- Theft or total loss of cargo
Airfreight Cargo Insurance
Air freight is considered the riskiest way of moving cargoes. Even though the cargo capacity of an aircraft is smaller, the goods carried are usually more high-valued. These need to be transported the soonest possible time. Airfreight cargo insurance is necessary to ensure that the consignee can be reimbursed in the event that the goods are exposed to risks resulting to damage and loss.
How to Minimize Risks?
a. Avail services from accredited freight forwarders
Insurance reimbursements for loss or damage of cargoes will not be approved by your insurance company if the carrier you have chosen is not a legitimate one. It is the shipper’s due diligence to ensure that they only ship through accredited freight forwarders.
b. Choose a provider with good trucks and vessels
Accidents may be inevitable, but forwarders with or are partnered with trucks, ships and aircraft in tip-top shape are the best ones to entrust your shipments to.
c. Choose the air freight for small, high-value cargoes
Minimize risks of theft for these expensive items by choosing the shortest possible time it is in transit.
d. Pack and label your goods properly
Damage on cargo might be caused by improper packaging and mishandling. Since you know your cargo better, do your own secure packaging and tag it with “Fragile” stickers, if necessary. This applies to less than container load and loose cargoes.
Cargo insurance is a definite must for all your freight forwarding needs. It has highly customizable insurance coverage that offers you peace of mind from warehousing, docking, loading, transit and offloading. A good freight forwarding partner will always advise you to secure one – whether you get it from them or not. This is a way of showing the same care and concern as you do for your cargo.