Cargo insurance is a mark of a reliable freight forwarder. If the company is insured, you know you can trust them to ship your goods. The insurance covers your shipment from a range of risks, which gives you peace of mind that even in the worst-case scenario, you have a backup plan in place and won’t suffer extensive financial damages.
But what does the insurance cover? And why exactly is it important? Here is everything you need to know about cargo insurance.
What Is Covered Under Cargo Insurance?
Cargo insurance — also known as freight insurance, marine cargo insurance, or goods in transit insurance — covers the loss, damage, or theft of cargo goods while they are in transit. Insurance is essential for shippers who want to protect their goods during transportation, whether on a ship, truck, or airplane. Companies like Dedola cargo insurance provide coverage for loss incurred by such things as collision, sinking, destructive weather, burning, faults in vessel management, strikes, and even riots or civil commotions.
When goods are in transit, they are vulnerable to various risks, including damage from fire, theft, or accidents, as well as environmental damage such as flooding, strong winds, and hail. The shipment will travel by air, land, or sea, where it could be susceptible to airplane crashes, derailed trains, vehicle collisions, and boat capsizes.
You can imagine the magnitude of risks the cargo has to go through. While you can’t control external factors like weather, you can insure the goods to get financial protection and compensation if things go south in transit.
Cargo insurance can cover a variety of goods, including raw materials, finished products, and even hazardous materials. It can also cover the cost of repairs, replacements, and storage fees, as well as the cost of any legal fees associated with the claim.
Depending on the type of goods and the mode of transport, you’d need a different kind of insurance. Generally, the higher the value of the goods, the higher the cargo insurance coverage should be.
Types of Cargo Insurance
There are several different types of cargo insurance available, each designed to meet the specific needs of different shippers. Here is your guide to all the prominent types to know about.
Marine Cargo Insurance
Marine cargo insurance is the most common type of cargo insurance. It provides coverage for goods transported by sea, air, or land. This insurance covers physical loss or damage to cargo caused by various events, such as piracy, fire, and natural disasters. It also covers the costs associated with delays in transit, as well as legal fees that may be incurred in the event of a claim.
Automobile Cargo Insurance
Automobile cargo insurance is designed for shipments transporting goods via motor vehicles, such as trucks, vans, or cars. The insurance provides coverage for damage or loss during transit, as well as any liability costs that may be incurred if the vehicle is involved in an accident. It provides coverage for goods that are damaged due to vehicle breakdowns or mechanical problems, too.
Aviation Cargo Insurance
Aviation cargo insurance is meant for items that are shipped via air. This insurance provides coverage for damage or loss caused by air accidents, as well as delays in transit that may be caused by weather or mechanical issues. It covers the costs of emergency repairs to the aircraft as well.
Rail Cargo Insurance
Rail cargo insurance is curated for goods shipped via rail, providing coverage for damage or loss that occurs during transit, as well as any liability costs that may be incurred if the train is involved in an accident.
Specialty Cargo Insurance
Specialty cargo insurance is designed to provide coverage for goods that are considered to be high-risk, such as hazardous materials or valuable items. Under this insurance, you get coverage for damage or loss that occurs during transit, as well as any liability costs that may be incurred if the shipment is involved in an accident. It also covers the costs of emergency repairs to the vehicle if necessary.
Why Is Cargo Insurance Important?
Cargo insurance provides financial protection for both the shipper and the receiver of the goods. Without cargo insurance, the shipper would bear the financial burden of any damage or loss during shipment. With cargo insurance, the shipper is reimbursed for the cost of the goods, as well as any associated costs, such as freight charges or taxes. The receiver is also protected, as they can be assured that their purchased goods will arrive in the promised condition.
Cargo insurance also provides peace of mind. Knowing that your shipment is covered in the event of an unforeseen incident can help reduce stress and worries. In addition, when goods are insured, the shipper is more likely to take extra precautions, such as using the most reliable shipping services and appropriate packaging, which can help ensure that the goods arrive safely.
Regardless of what kind of shipment you’re dispatching, ensure you have the right insurance coverage, so you don’t suffer huge losses because of circumstances outside your control.