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Cargo Insurance

The term cargo insurance, popularly known as marine insurance, applies to all modes of transportation. The need for export (or import) cargo insurance often differs from exporter to exporter (or importer to importer) and from consignment to consignment.

Cargo insurance provides coverage against physical damage or loss of goods during shipping, whether by land, sea or air. Because of the many dangers inherent in shipping, most individuals and businesses choose to insure their goods while they are in transit even when the insurance is not mandatory in trade term.

 

Depending on the international commercial terms, either the seller (the exporter) or the buyer (the importer) is responsible for insuring the cargo. The seller is obligated to insure the cargo in the CIF and CIP terms. The seller may opt not to insure the cargo at his/her own risks in the DDU and DDP terms.

 

Marine cargo insurance, also known as freight insurance, marine insurance or shipping insurance, covers the risks of loss or damage to goods and merchandise while in transit by any method of transport – sea, rail, road or air – and while in storage anywhere in the world between the points of origin and final destination.

What types of business require cargo insurance?

The need for cargo insurance is not limited to import/exporters or transport providers. Regardless of what business you are in, it’s likely at some point during your supply chain you will be sending or receiving goods. Some key industries that rely heavily on shipping include:

Manufacturing – bringing in raw materials and distributing finished products
Agriculture – primary producers are continually transporting goods to and from their farms – ranging from grains and fruits to livestock transport
Wholesalers – moving goods from producer to retailer
Retailers – moving stock from warehouses and stock transfers
Mining – importing and exporting raw materials and equipment

Most of the time, goods arrive at their destination without incident, however in the event that the unthinkable happens the consequences can be devastating for you and your business if you do not have adequate and appropriate cargo insurance coverage.

When is cargo insurance required?
Whenever you are moving goods from one place to another it is advisable to have cargo insurance. The period of time you are covered for will be clearly defined in your policy and should start before the product leaves the place of origin and conclude after the goods are received.

Cargo insurances is a complex product and ranges from basic minimal protection to more comprehensive policies that can include loss of sales and replacement of products.

The types of coverage available also vary widely and can include cargo, commercial hull and marine goods in transit. Often, these covers can be combined to ensure your cargo is protected.

 

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