You’re investing in your company every time you have a shipment. It’s surprising how many businesses don’t protect that investment with cargo insurance and pay a lot for it at the end.
Cargo insurance covers loss and/or damage of cargo while it is in transit between point A to point B. Many try to save a little money upfront by not insuring their cargo, but here we´re going to show you why this is not a good idea and why you will love to ensure your cargo:
1.Reduce exposure to financial loss
If you’re an exporter who has not been paid for the merchandise at the time of shipment, or an importer who has paid for all or part of the goods prior to receiving them, you run the risk of suffering a financial loss if the goods are lost or damaged during transport.
Whether your cargo is valued at $6,000USD or $6,000,000USD, that is your direct loss if your cargo is destroyed, lost or stolen. So, if you can’t afford to lose it, insure it. Cargo insurance reduces exposure to cargo loss.
2. Coverage for limited carrier liability
The carriers, by law, are not responsible for many common causes of loss that occur in transport. And, even if they are liable, in the event of a loss carriers’ liability is limited. In most cases, you will only recover a small portion from the carrier. More information in our post Carrier Liability vs All Risk Cargo Insurance
3. Cargo Insurance is flexible
Cargo insurance is not one size fits all. Different sizes of shippers and their commodities may have different needs in every sense. You don’t have to pass on cargo insurance because the ‘general policy’ doesn’t fit your needs. Why pay for coverage you don’t need?. If you currently buy cargo insurance and your vendor does not recognize these needs, you need a new vendor.
4. Contractual Requirement
Your sales contract may obligate you to provide ocean cargo insurance to protect the buyer’s interest ( especially when selling goods CIP or CIF). Failure to do so cannot only subject you to financial loss if there is loss or damage to the cargo, but non-compliance with the terms of your contract with the buyer can lead to loss of sales and legal issues.
Moreover, you must have control of the cargo insurance you are hiring. Not all insurers are created equal and not all the policies have the same coverage and can be more price-driven.
5. With Cargo insurance you will have someone else looking at your shipment.
Cargo insurance policies have conditions of insurance. Many of these conditions have the aim to ensure shipment risk is mitigated as much as possible. A good cargo insurance vendor just doesn’t arrange the insurance, we want to hear about their commodity, the mode of transport, and how it’s packaged. In doing so we are checking out for your risk exposure. Although cargo insurance is not a true form of quality control, having one more layer of process looking for specific things doesn’t hurt.
6. Cargo damage is too common, so you should notice that your cargo is under risk
The most common damages are theft, storms, crushed containers, ships sinking, losing a container at sea, etc.This list can continue, with many more possible reasons. All these reasons can be considered a good one to get cargo insurance.
Every day, a lot of shippers suffer from these events, and many of them regret their decision not to get insured. If you want more information about this you can read this post.
7. Cargo Insurance is not expensive
When compared to the overall costs in getting your commodity from point of origin to point to destination, cargo insurance is such a small fraction of the investment, it almost becomes invisible. If you would like to know an accurate cost of your next cargo insurance you can contact us for a quote.