What is Cargo Insurance and does my shipment really need it?

In this post, we would like to take a deeper look at Cargo Insurance. Specifically, what is cargo insurance and if you as an importer/exporter or freight forwarder really need it for your shipments. We also highly recommend that you read our post entitled How much Cargo Insurance cost? first to continue with this topic.

What is Cargo Insurance or Freight Insurance?

In a few words, Cargo insurance is a type of insurance that compensates a buyer or seller of goods against cargo damage or loss of cargo.

Despite the industry has been talking about it for years, there is still a feeling that insurance is unnecessary. Because it is an intangible benefit, one that can only be tested under adverse circumstances.

As we mention in another post legally, all carriers must carry a minimum amount of insurance, known as carrier liability. But as we explain it provides very limited coverage and importers/exporters can request cargo insurance to protect their goods from loss, damage, or theft while in transit.

What could happen to my cargo?

As you may know, cargo is packed inside a CTU(Cargo Transport Unit) that goes through various motions while it is in transit ( road, rail or sea), we are going to explain these movements first to understand.

Movement by Road or Rail: There are several forces acting on the cargo during transport caused by the movement of the truck or the rail wagon, the gradient of the road, in the second case vibration of the rails, the speed of movement or unexpected stops. These forces can cause the cargo to tip, slide, and move may cause damages, sliding and wandering of cargo which could seriously damage the merchandise.

You have to be assured that the cargo must be secured sufficiently to withstand all these forces en route.

Movement by Air: This is less risky because cargo does not suffer a lot of movement only in normal conditions when the plane lands, takes off and sometimes when there is turbulence, and because it spends less time to arrive at its final destination. But These forces can cause the cargo to slide, and move.

Movement by Sea: This is the worst movement a shipment may suffer because it can be moved in different ways. Each of these movements causes a different type of stress on the shipment and there is a high chance of it damaging the container and even coming out of the container.

In terms of rolling, ships have been recorded with rolling movements of up to 40 degrees on the rough seas and, imagine your cargo is moving inside the container with this!

When you imagine these movements, you can imagine the stresses that the cargo inside the container suffers especially if it is not packed and secured properly.

Cargo Insurance
Your cargo may suffer a lot of movements while it is in transit| Photo taken from Freepik

So, do I really need cargo insurance ?

You may wonder why we are talking about cargo damage instead of whether you really need cargo insurance? Because of claim statistics, cargo damage is the leading cause of cargo claims.

So, did you ever think about all of the above mentioned facts? Maybe these facts may not be at the top of your priorities because more often than not, your focus is on the business, the focus is on getting the goods to the buyer in time.

The fact is that ANYTHING can happen to your cargo while it is in transit in short or long distances, including being damaged or stolen whether you like it or not.

On the other hand, the buyer and seller have to have a correct interpretation of the Incoterms chosen could lull you into thinking that the other person has insured the goods or it is the other person’s responsibility to insure the goods, so as a freight forwarder you have to advise your customer to have all this clear.

If your cargo is not covered sufficiently by insurance and cargo damage or total loss happens due to any of the above movements, you as the buyer or seller will perceive losses. How would that affect your bottom line?

So,the answer to our question is YES, CERTAINLY YOU REALLY NEED CARGO INSURANCE. In your own interest and the interest of your business, you need to ensure that your cargo is sufficiently covered by cargo insurance.

The business of packing and securing the goods is left to someone else (3pl) to handle, that’s why CARGO CARE SERVICES is here to help. We can assist you with both matters; Cargo Insurance with ALL RISK coverage, door to door, nil deductible and a Properly Packing and Crating of your goods before shipping it.

Also if you want help to know which cargo insurance is for you and fully understand your actual policy and make sure you are protected.

So do not hesitate and contact us today !

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How to manage your cargo during the COVID-19 outbreak

Many months have passed since the COVID-19 outbreak started, every aspect of our living has been changed to preserve our safety, but also, to give us the suitable conditions to continue with our normal basis.

 

Governors, following the recommendations of the World Health Organization (WHO), have developed severalconditions and regulation to stop the spreading of the virus, but also to allow people to do their jobs in the safest way possible.

 

Speaking of the cargo industry, the lockdowns and movement restriction have affected the entire supply chain, causing massive losses for the shippers. The new challenge facing the cargo industry is to continue with the work to minimize these losses, while protecting people’s lives.

 

It could take months or years to normalize the situation, but for now we must adapt to the new way of living. In this article, we want to give you some advice on how to manage your cargo during the COVID-19 outbreak.

Keep in mind the state of your cargo

As we said before, the entire cargo industry supply chain has been affected by the outbreak, so it is important to investigate the state of your cargo and verify if it is in a good condition.


If your cargo is in storage, you need to consult the general state of the warehouse: if the protection system is operative, the fire and anti-intrusion alarms are operative and if the humidity and temperature levels are optimal to your goods. If your merchandise is perishable, you need to be extra careful with the correct store management of your goods to prevent its deterioration and a potential loss.

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With good hygiene and disinfection plan, you can return to your work place | Photo taken from Freepik

Consult the transportation

With the lockdowns of the countries, there have been a lot of delays in the shipment schedule, increasing the cost of storage and the potential damage of accumulation cargo on the warehouse. On the other hand, some shippers offer you the possibility of deviation as an alternative to accomplish the shipment schedule.


Evaluate these two scenarios and decide what benefits you prefer and minimize the potential of a loss. Whether you want to maintain your goods store or take the alternative route to complete the shipment, consult your cargo insurer about the coverage that your goods have.

Implement a good hygiene and disinfection plan

To prevent the spreading of the virus on the cargo industry, every step of the supply chain need to follow a serial of hygiene and disinfection plan. The WHO gives us some recommendations that we must follow to protect yourself and others.


  • The use of masks is vital to stop the speeding of the virus.
  • Wash your hands with soap and water every 3 hours, when there is visible dirt or when you touch a surface.
  • Disinfect all your work implements with at least 60% alcohol.
  • If you receive your cargo, perform a disinfection plan on every item. Later on disinfect the workplace and finally yourself.
  • As a worker, if you feel sick, stay at home.

Communication is a must to successfully reactivate the economy, consult to your freight forwarder and cargo insurer about the state of your cargo and some recommendation to protect it. In Cargo Care Services we constantly monitor the outbreak situation and we help you to prevent any damages or losses that may affect you.

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How much Cargo Insurance cost?

The aim of cargo insurance is to cover your goods against damages or losses which can occur from the beginning to the end of the transportation process just for the payment of certain insurance premium, but how much would it really cost?

 

The answer may not be that simple as give you a value, because there are many factors that affect the final cost of cargo insurance but in this blog we want to give you all the aspects to keep in mind to define the cost of freight insurance..

What are the factors that affect the cargo insurance cost?

There are many factors that affect the cargo insurance cost, exporters and importers need to understand that there are a lot of risks during the shipping process, and you have to be advised for a broker or insurance company who can understand your needs and offer you a insurance policy that protects your cargo and your investment.

One of the factors that affect the cargo insurance cost is the value of the goods itself, of course, you are protecting your investment, so it’s the main factor to be considered.

The origin and destination points of your shipment are also one of the factors that affect the cargo insurance cost: the more traveled distance the more risks your cargo affront and the more coverage it needs.

Speaking of shipment, the transportation method used to your shipment affects the cargo insurance cost, especially the ocean shipments, that are more expensive than air or truck shipments; due to the risks and time that the cargoes are exposed.

Another factor that affects the cargo insurance cost is the rate of theft of your goods. There are some goods that are catalogued as “high-risk for theft” items that are so valuable that many burglars want to steal, like computers or medicine; meanwhile, others that are catalogue as “low-risk for theft” even though these
items can be stolen, are not so frequent.

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There are many factors that affect the cost of cargo insurance. | Photo taken from Freepik

The list of factor can continue, so give you an exact value it very difficult, insurance company and broker examine all these items and make the calculation to give you an accurate quote of your cargo insurance.

How much cargo insurance cost?

We can assist with Cargo Insurance from $30 USD for inland shipments. But as mentioned below there are many factors to consider, you can get a quote in minutes here.

Basically, it is multiplying the insurance premium by the value of the merchandise.

Find the best company who can ensure your cargo

You can find many options in the market, but you must find a company that gives you the correct information about exclusions and cover, so you don’t have headaches after a claim shows up.


In Cargo Care Services we have a team with more than 12 years of experience, we give full customer support, either if your shipment is domestic or international. We are backed by a worldwide network of business partners that will assist our customers immediately and face any situation to ensure the process will be done correctly and quickly. Our policies for new general cargo are “all-risk” coverage door to door and non-deductible for new merchandise.

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Carrier Liability vs All Risk Cargo Insurance

As we mentioned before, cargo transportation is one of the main commercial activities in the world, it requires a lot of preparation, experience and a good logistic team behind to successfully accomplish each shipment.

But, as we know, nothing can be perfect. Even the most prepared shippers and brokers can encounter adversities that result in damages or losses for the cargo. So it is always recommended to have insurance that covers you and your customers assets from its consequences.

If you regularly import or export goods around the world, you may be familiarized with terms as “Carriers liability” and “All Risk” cargo insurance, but did you know everything about these two options?? So we are here for you. In this blog, we want to talk about carrier liability vs. all-risk cargo insurance and which is the better option for you.

What is carrier liability?

carrier-liability-vs-all-risk-cargo-insurance Legally, each carrier offer you a minimal amount of coverage for your shipment. | Photo taken from Freepik

Carrier liability is a minimal amount of insurance that legally each carrier need to offer in case cargo suffers damage or losses. You probably think “oh so there is no problem, my cargo is safe and sound, we have the carrier liability”. Well, it is more complicated than that!

Carrier liability has limitations in certain instances when the damage is due to an act of God (weather related), or act of the shipper (improper packaging or loading). In these two cases, the carrier cannot be at fault.

Carriers are required to pay only if they are proven to be responsible for causing the loss or damages and the amount to be paid is very restrictive, for the most part, carrier liability covers up to a certain dollar amount per pound and it also varies depending on the unit quantity and commodity type (freight class).

Speaking of payments, the refund by carrier liability as we said before is less, never expect to recover all the cargo value. Every carrier has their own policies and carrier liability, the restrictions and refund are stipulated on their contracts.

What is All-risk cargo insurance?

carrier-liability-vs-all-risk-cargo-insurance This insurance is the best known and preferred choice among importers and exporters | Photo taken from Freepik

“All-Risk” coverage is the most popular and comprehensive form of coverage for cargo. All-risk cargo insurance provides you coverage for physical damages and losses, as a result of external causes that may occur during the shipping process.

Different than the carrier liability, All-risk cargo insurance cover your cargo for its original value, so if something bad happens, you do not need to be worried, because you will recover every penny that you invest.

Keep in mind that even this kind of coverage has some exceptions, so it is subject to policy terms, conditions, and exclusions that are based on commodity, origin and destination, conveyance, amount to be insured, insurance company that you are using, etc. If you want to learn more about it please read our blog “Cargo insurance 101: the basics.”

So, what is the best option for you?

With no doubt, acquire All-risk cargo insurance is the best move for you and your company. With this insurance, your cargo will be fully protected against any calamity that may occur during the process, is the insurance with less restriction on the market, and can assure the total refund of your investment, meaning that your company will not be affected by the losses, economically speaking.

Start protecting your cargo NOW!!!

At Cargo Care Services your cargo’s safety is our main concern, so we can provide you:

  • Excellent rates for Air, Ocean, and Ground shipments.
  • We customized rates and conditions depending on customer needs, volumen, commodities, type of shipments, etc.
  • Simple processes to acquire insurance policies and certificates.
  • A worldwide network of adjusters and agents in case of a claim.

If you are interested in having a quote you can contact us here.

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The impact of COVID-19 in the cargo industry

The recently COVID-19 outbreak has impacted our lifestyle in several ways. Most industries were not prepared for an outbreak, leading to multiple challenges to minimize the losses associated with COVID-19.

For the cargo industry, the main challenge relies on the lockdown and quarantine state that many governments and countries have declared as a prevention measure to reduce the spreading of the virus.

These measures have a consequence on the shipping schedule of cargo, leading to delays, reroutes, accumulation of the cargo, discharged short of their final destination and even the possibility of damages and deterioration of goods.

Even though there are some exceptions to the quarantine and lockdown, this not mitigate the total losses that many entrepreneurs may have, also, after this situation ends, it could take months to solve every cargo contractual situation, to evaluate the potential losses and the coverage provided for the insurance.

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It is important to analyze all the clauses of your cargo insurance to be sure that, in this particular situation, your cargo is cover. | photo taken from Freepik

Delays

Most of the importers and exporters want to maintain their cargoes moving, to prevent delays and extra costs due to this, keep in mind, due to the reduced personal and restrictions, delays are inevitable.

In general, cargo insurance excludes the coverage of your cargo if the damages or losses are caused by delays. You can also decide if you want to store your goods or try alternative routes to have your cargo delivered its final destination.

Most of the time, additional cost for re-route are not cover by cargo insurance, other insurances might have clauses that cover your cargo for certain deviation or delays.

Therefore, it is important to talk with your insurer about the state of your cargo and the insurance clauses to know how you can proceed with the transportation of your cargo.

Accumulation of cargo

As a consequence of delays, accumulation of cargo is another risk that affects your insurance. Cargo insurance covers your freight from damages or losses, but it is expected that your cargo is properly packed and stored to prevent this.

The problem is, due to the delays, warehouses and ports will start accumulating cargoes, exceeding their capacity. It is most likely that your cargo is not being handled correctly leading to potential loss or damage.

Perishable goods are the morest affected ones. Cargo insurance covers your cargo for spoilage caused by a peril, but if the merchandise its spoil because of delays, you may have no coverage.

Deviation

This case affects the cargoes that already in transit. Some vessels reserve the right to arrive at another port if the final destination is considered a high-risk area. This deviation can cost you extra which may not be included in your insurance.

Force majeure

Force majeure is a clause that exempts freight forwarder and insurer from all responsibility of the cargo due to unexpected or uncontrollable situations. The problem is, the causes that triggers a force majeure need to be expressly addressed in the contract to be valid.

We know that this situation is complicated, so it is better to count with a liable and serious logistic partner that advises and gives you the best solution for your cargo. In Cargo Care Services we constantly monitor the outbreak situation and we help you to prevent any damages or losses that may affect you.

Maybe you might be interested:

How to manage your cargo during the COVID-19 outbreak
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Cargo Insurance 101: The basics

If you need to import a machine for your company or export one of your products abroad, then you need cargo transportation.

Cargo transport, is one of the main commercial activities in the world. With a massive activity, comes a huge amount of risks during all the shipping process that can lead to partial or even total loss of your merchandise.

Then, you’d be wondering: how can I protect my cargo and my investment, for all the risks that come with the shipping process? The answer is simple: you need to get cargo insurance, that’s the smarter and safety decision that you can make.

In this blog, we want to explain to you the basics of cargo insurance, and why it’s so important for you to acquire one.

What is cargo insurance?

Cargo insurance is a type of insurance that covers your cargo for damages or losses while it is in transit between the point of origin and final destination of your cargo.

Typically, Cargo Insurance is compared with car insurance: You need a minimal amount of coverage to get on track to protect your car for collision or theft, so cargo insurance is the same. You need to insure an amount of money equivalent to the cost of your cargo, in case something happens (a theft, a crash or another accident) you do not need to take money out of your pocket.

Some carriers, brokers and freight forwarders, offers you a minimal amount of insurance required for carrier liability. It’s not enought, it does not protect your cargo for all the risks, and the refunds are usually less than the total value of your cargo. Investing in cargo insurance that covers your goods, guarantees you protection against all the economic risks derived from damage or loss of product and other accidents.

Is Cargo insurance a requirement?

Cargo Insurance 101
It's highly suggested to invest in a good cargo insurance. | Photo taken from Freepik

There is no requirement nor obligation to acquire cargo insurance when you’re shipping your goods. However, it’s highly suggested to all the importers and exporters, to get one if they don’t want to assume the economic losses if something happens.

Life is unexpected, you cannot control or even assure that your cargo will always be safe and sound. For example, during the shipping, the vessel can sink, explode or be attacked by pirates (do you think we are overreacting? Maybe a little). As we said before, the carrier’s liabilities don’t cover all of the risks, so you’ll have to pay for all the losses if something unexpected happens.

Furthermore, most of the time your cargo is shipped together with other shipments, and if something happens to the other shipments, the maritime principle (or concept) of General Average stipulates that the losses are divided by all the owners of the surviving merchandise. So, your cargo will not be released until you pay.

To avoid all this risk, it’s better to invest in good cargo insurance, to add an extra layer of protection to your goods and your investment.

Types of Cargo Insurance

As with life or car insurance, there is a variety of cargo insurance as well. Each variety protects your cargo in different scenarios and their scope of protection may vary. This is why you need to carefully analyze the cargo insurance options to choose the one that suits your needs.

Land Cargo Insurance

As its name suggests, this insurance protects your cargo while is in transport on land by trucks or utility vehicles. This insurance is for domestic shipping only, so it applies within the confines of the United States. The coverage of this insurance is against theft, damages for collision and similar risks.

Marine and air Cargo Insurance

This insurance protects your cargo during shipping by sea but also protects you by air shipping. The coverage of this type of insurance applies to international export and imports, against bad weather, piracy, damage from loading or unloading, and similar risks.

Different Types of Cargo Insurance

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There are different types of cargo insurance, so choose the one that offers you the most coverage. | Photo taken from Freepik

Whether your shipping is by land, by sea or by air, the insurance coverage (or scope) depends on your contract policy details.

All risk Coverage

This insurance is the best known and preferred choice among importers and exporters. All risk insurance protects your cargo for physical damage and losses, a result of external causes that may occur during the shipping process.

Even if is all-risk insurance, there are few exceptions:

  • Damage because of negligence, for example, bad packaging and crating.
  • Inherent Vice, it means the deterioration of cargo due to its inherent nature instead of external factors. For example, a wine cargo, due to variation of temperature, movement or other conditions affect its composition.
  • Cargo Abandonment
  • War, riot, strike and civil commotions.
  • Customs rejection
  • Loss of use or market
  • Failure payment

Named Perils Coverage

This insurance only protects your cargo for the risks list on the policy. It’s a slightly more limited type of insurance. So, if you want to get a Named Perils coverage, you need to make sure that the risks listed in the policy are necessary enough for your cargo.

Total Loss Coverage

This insurance protects your cargo when it occurs damage on it and the cost of repair is more expensive than the own value of the cargo. Many insurers companies consider the possibility of a total loss coverage when the loss of the cargo’s value is equal to or greater than 50% or 60%.

But also, the total loss coverage insurance can be claimed if the ship is abandoned, due to heavy damage, but the cargo is safe, however, the cost of bringing it to a safe place is more than the total value of the cargo.

Cargo Clauses – C for used merchandise

These, are the clauses that are embedded on the cargo insurance and specify which items in the cargo, are cover in cases of damage or losses. The C clauses are the more restrictive one, so your payment would be lower, this means the coverage would be lower.

In Cargo Care Services, the major perils covered by our C clauses are:

  • Fire or explosion.
  • Vessel or craft being stranded grounded sunk or capsized.
  • Overturning or derailment of land conveyance.
  • Collision or contact of vessel craft or conveyance with any external object other than water.
  • Discharge of cargo at a port of distress.
  • Loss of or damage to the subject-matter insured caused by general average sacrifice.
  • Jettison

As you can see, acquire cargo insurance is highly suggested if you want to secure your goods against a potential loss due to physical damage. In Cargo Care Services, we can help you protect your cargo and your money with the best insurance policies. Ready to insure your cargo? Get a quote today.

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