Transporting goods is a challenging task as facing natural disasters, accidents or any risky routes during the transit period is unpredictable. Think of the financial loss these incidents can cause like damaged goods, cancelled shipments and others. Cargo insurance comes as a savior as it protects you against the loss caused by any such unpredicted incident. So, who provides you with the cargo insurance and what are the types of cargo insurance? Continue reading the blog to find out.
What is Cargo Insurance?
Cargo on way is susceptible to damage as it may face an unpredictable event on the road, air or sea, such as risky routes, a natural disaster or accidents. Cargo insurance protects businesses or companies when they face any financial losses that may occur due to damaged cargo. There might also be incidents of theft or cargo damage where businesses can face huge financial losses. Here is where the importance of cargo insurance comes in safeguarding businesses from potential financial loss.
Taking insurance for your cargo is a way to compensate for what you lost that was not in your hands. It gives you a sense of relief that whenever you face any uncertain incident, you will receive compensation for your cargo to bear that loss. But how does it work? Well, as a cargo owner you simply need to purchase a standalone or a broader insurance program. Let us understand this in detail in the next part below.
Types of Cargo Insurance
Just as your health or life insurance, cargo insurance has many options to choose from, each having its own coverage. The common types of cargo insurance we will cover are- land cargo insurance, marine cargo insurance, all risk and named perils insurance.
Land Cargo
Land cargo, as the name suggests, is the insurance type that compensates for your loss when your shipments are being transported on land. This can be your cargo on truck or any other vehicle. This type of insurance is domestic and covers for theft, damage from collision and other related risks.
Marine Cargo
Marine cargo insurance defines when your cargo insurance covers the sea or air freight and provides protection from hazards related to these modes of transportation. This type of policy is either permanent or renewable depending on whether you are a frequent shipper. It covers damage from loading/unloading, bad weather, piracy and other related risks.
All Risk
The all-risk insurance policy as the name suggests offers the broadest types of coverages with a wider range of protection. It not only covers the types of physical losses but also any related external factors such as war, pollution or natural disasters.
Named Perils
This policy is also known as the ‘Free of Particular Average’ and is in contrast to the all risk policy. The named perils policy covers only specific types of losses, such as due to fire, earthquake, theft, derailment and vessel collision.
How to Get Cargo Insurance?
Having cargo insurance is crucial when you are transporting high-value goods or international shipments that have longer routes. As a cargo owner you will need to purchase the cargo insurance either through a standalone cargo insurance policy or a border insurance program. Let us know more about how cargo insurance works.
Standalone Cargo Insurance Policy
In standalone, you need to purchase the insurance policy from an insurance company through a broker. The insurance policy will specify for you all the terms and conditions and you can choose a policy that suits your needs. Generally, standalone policies cover a wide range of risks and are best suited for major companies that have high-volume shipments.
Cargo Insurance Program
Another way you can purchase your insurance is by purchasing cargo insurance as part of a broader insurance program. This program has a package of insurance products that include property insurance, liability insurance, cargo insurance and others. This type of insurance comes as a cost-effective option for businesses that need other types of insurance all covered in one package.
When Do You Get Cargo Insurance?
The cargo shipment industry is ever-growing and there is a need to safeguard cargo from any potential losses. Whether there are transportation risks, pilferages, natural disaster or compliance risks, having financial protection for your business is crucial.
There can be any uncertain incidents that can occur while your cargo is on the way or waiting at a stop, causing damage to your cargo. So, it becomes essential to get cargo insurance. You can get cargo insurance if you want to save your cargo from common risks, which can include the following:
Accidental Damage
Your cargo can face any accidental damage and can get scratched, spoiled or dented which can result in huge financial losses.
Loss or Theft of Cargo
If there is any miscommunication or error during shipping it can lead to cargo loss. Moreover, cargo theft instances have become common these days which can leave you with huge financial losses.
Delays
If you get stuck midway due to any reason, it is likely to cause you shipment delays which also results in financial losses. In international shipping, custom issues are common that lead to shipment delays and loss.
Conclusion
In this unpredictable transport journey, it is essential for you as a cargo owner to ensure your goods are safe and you get compensation if any losses occur. This way you can safeguard your business and boost its credibility even in uncertain times. We hope through this blog you will have a fair understanding about what cargo insurance is and what are the different types of cargo insurance.