Cargo insurance or marine cargo insurance is a type of property damage insurance in the sense that it protects your physical assets. While property damage insurance will cover your assets while in your premises, cargo insurance will cover them while in movement, either locally or internationally. It may includes as well local transit coverage, when your goods are store temporary waiting to be forwarded to their final destination.
Cargo insurance covers your goods during their transport by air, sea, or land against certain types of events. The cargo insurance will reimburse the value of the goods destroyed during the travel for you to be able to replace them. It will help you reduce the impact of a loss on your supply chain.
The two main types of insurance cover in cargo insurance are the All Risks Policies (Institute Cargo Clauses A) which is the broadest cover and the perils named policies (Institute Cargo Clauses B and C).
What does it cover?
The scope of covering the goods during the transportation is very broad. To be simple, goods are protected against all events leading to cargo damage or loss such as theft, acts of god, bad weather, collisions, fire, loading and unloading, and many more. It will usually not cover the damages to the goods if they are not properly packed or stored during the transport or delay in delivering the goods.
How much does it cost?
The rate applies to the value of the goods transported and depends on the type of good, on the transportation means, the country of destination or origin, your past losses, and of course the scope of cover you have chosen. This insurance could be purchased on a shipment basis or for a specific period, generally one year.
When do i need to buy cargo insurance?
There are 2 elements to consider.
First, it is important to know that while the goods are under the responsibility of the transport carriers or the freight forwarders, their contractual liability is usually very limited. It is limited to a certain amount of money per kilogram of goods transported or a certain amount per parcel.
Then, it is important to know the incoterms mentioned in the purchased/sales contract. Some incoterms shift the risk from seller to buyer at specified points in the transportation.
Contact us if you have any questions about Cargo insurance.
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