Strange as it may seem, an important question such as cargo insurance is almost never considered by cargo owners. Everyone hopes that problems with cargo delivery and safety will only befall other shippers.
Cargo Insurance Types
Freight insurance covers possible damage during cargo transport. There are two kinds of freight insurance:
This insurance covers all risks: fraud, theft, accident, constructive destruction of goods, etc., in relation to the property (except war, confiscation, or intent of the insured).
Partial Damage Insurance.
No liability for cargo damage, except in the case of a wreck. Only losses from total loss or destruction of cargo are covered.
The difference between the two categories of insurance is that in the latter case, the insurance company covers only losses caused by the loss of the entire cargo. The greatest protection of a cargo owner’s interests is provided by the first type of insurance.
How Can You Insure Your Cargo?
There are many potential hazards to your cargo during transport:
- traffic accidents
- Loading and unloading risks
- natural catastrophes
- cargo damage or loss
- cargo shortage
- marine hazards
- general accident
International transport law clearly defines when the carrier is or is not liable for what has happened. For example, in force majeure cases the company is not responsible, and the client who tried to save money on insurance can only regret the “unfortunate misunderstanding.”
It should be noted that cargo insurance and carrier liability insurance are completely different. When concluding a cargo insurance contract the cargo owner expects to get, if not the cargo, then at least compensation for its cost. A carrier’s insurance policy like ones used by Fly Movers has a different purpose — to cover any damage the carrier might inadvertently cause in the course of transportation. Not just to the cargo, it could also be damage to a third party’s vehicle as a result of a poorly secured load falling out, or damage to the environment.
In the case of carrier liability insurance, there is one crucial aspect. The insured event will occur only if the carrier is at fault for the damage to the cargo. If the carrier is not at fault, there is no insured event, and therefore there can be no question of compensation.
You may wonder, “How is the carrier not at fault if it has accepted the cargo and is obligated to keep it safe until the cargo is delivered?” Events that result in damage or loss of cargo can be conditionally divided into 2 categories:
- Through the fault of the carrier. Employees of the transport company have committed some kind of erroneous actions or For example, the driver left the vehicle with cargo unattended at an unguarded site.
- Through the fault of other factors that the transport company has no control over and could not foresee – for example, natural disasters, an accident caused by another driver, or a bridge collapse.
Therefore, we can say that by shifting the burden of insurance to the carrier, your cargo, relatively speaking, will be insured against only some of the possible situations. Your cargo goes on the road insured only for 50% or even less. Meanwhile, the road is full of surprises.
Three Golden Rules Of Cargo Insurance
In order not to worry about whether the insurance company will fulfill its obligations when the insured event occurs, it is enough to adhere to a few simple rules:
- Choose only well-known insurance companies that have a large number of positive reviews. For instance, it is good if you have acquaintances or business partners among the insurance company’s customers. They can share their personal experience and evaluate the work of the insurer.
- Carefully read the insurance terms and conditions and the documents that you are asked to sign. Then, this will help you avoid mistakes in the paperwork and detect hidden terms that are unacceptable to you.
- In case of an insured event, you should act strictly according to the instructions given to you by the insurance company. Provide all documents on time and keep copies of them.
Every cargo owner should decide whether to insure the cargo or be satisfied with the carrier’s liability insurance. It is better not to entrust the insurance of risks to a third party and choose the insurer and its optimal list of risks. Moreover, the savings on cargo insurance is only apparent. Meaning, the cost of liability insurance may be covertly included in the cost of transportation services.
Have a safe and successful transport!
We hope you found this blog post Is it Worth Insuring Cargo in Transit? useful. Be sure to check out our post What You Need To Know About Cargo Transportation for more great tips!
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