When is cargo insurance necessary?

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Is it worth adding additional cargo insurance to your expenses or is it possible to get by with basic coverage? What can happen to your goods during the journey and in what cases will the carrier not pay you a cent to cover the losses? Let's figure it out together in this article.

Why is it necessary to insure cargo?
For most entrepreneurs, insurance = extra costs. But this thinking persists until the first insurance cases. Then comes the understanding that this is, rather, a fee for safety and personal peace of mind.

After all, various “troubles” may very well happen to your goods on the way:

he may be lost;
steal as a result of a robbery;
it may "perish" due to the fault of the carrier or circumstances (bad weather conditions, fire, wreck, collision, etc.). By the way, many of such cases are not included in the basic insurance, that is, if (conditionally) the ship is in distress and throws your containers overboard to facilitate maneuvering, then you will not receive compensation for their loss.
Or, more likely, your goods may arrive at their destination in poor condition or incomplete. According to the American logistics corporation Flexport, ⅓ of all insurance claims are made due to careless handling of cargo.

That is, the risks of losses are really high, and insurance cases are on page seo service not isolated and occur daily.





What can be insured?
The most popular is freight loss insurance. However, there are policies that cover not only the cargo itself, but also other possible losses (including financial ones):

transport and/or customs costs associated with delivery to the destination;
expected lost profit (not exceeding 10%);
war or strike risks, etc.
There is no point in listing all possible options, since coverage depends on the policy of the insurance company (IC) you choose. For example, many ICs will offer you to include in the policy protection for losses incurred as a result of improperly performed loading and unloading operations. Others consider the contract to be completed upon the arrival of the container at the warehouse. If something happens to the goods after this period, it will be extremely difficult to prove guilt and receive payment.

What does the cost of the policy depend on?
It is important to understand that any insurance in general is quite variable and optional. Thus, the cost will depend on:

type of coverage: with liability for all possible risks (which is, naturally, more expensive), or for agreed ones (the most probable ones, which you will note when drawing up the contract);
coverage areas (taking into account the transportation distance, route and hazard category);
transport (air/sea/land or multimodal transportation);
forms of contract (one-time or general on similar terms).
Also, when calculating the tariff, the insurance company will take into account the type and cost of the transported goods, their volume and packaging, the presence of overloads, security and other factors.

One of these is the deductible (the amount below which you cannot receive compensation). For example, you decide to insure a shipment for $100,000 with a deductible of $1,250. The amount of the estimated loss is $1,200. You will not receive a payment (since this is $50 less than the deductible, i.e., your portion of liability).

Cargo insurance for sea transportation
There is such a thing as "basic marine line insurance", it is only $2 per kilogram. Which is clearly not enough to compensate for losses.

Therefore, it makes sense to choose additional coverage classes: experts in the field believe that it is optimal to provide yourself with 110% of the cost of cargo and freight costs.

For those who are interested in the question: "What insurance should I choose in the USA?", we will answer as follows: the carrier itself will often offer you a policy. That is, there is not always a need to monitor the market and independently search for the best offers, spend time calculating the terms of contracts. It is important to understand that most maritime companies do not have licenses and permits for insurance activities, so they act only as intermediaries, having stable partnerships with the insurance company (and sometimes more favorable conditions).

How do payments occur?
It is naive to expect that the insurance company will generously and without questions pay the entire amount specified in the contract. Therefore, if an insured event does occur with your cargo, be prepared for the following scenario:

Filing a report of the incident and providing the required documentation.
Conducting an investigation, establishing the causes and the guilty parties.
Coordination of damage assessment.
Making a decision on the amount of payment (or its complete absence).
Legal proceedings in case the parties have not reached a peaceful agreement.
But, despite all the nuances, insurance was and remains a very necessary expense item for those who want to ensure the stability of their business and protection from unforeseen circumstances.