Cargo Insurance

What is cargo insurance?

Cargo insurance is a form of insurance that explicitly covers loss or damage to goods during transport. It covers a variety of transport methods, such as Sea Freight, Air freight, Rail, and Road transport. It is designed to protect the owner of the goods from financial loss due to unexpected events such as natural disasters, theft, collisions, etc. Cargo insurance can be purchased for a single shipment or as term insurance, which covers multiple shipments over some time.

The importance of cargo insurance

Cargo insurance is critical in international trade for the following reasons.

1. Financial protection: Cargo insurance compensates for financial losses caused by the loss or damage of goods so that companies do not have to bear the full cost.
2. Compliance requirements: Many countries require importers or exporters to provide proof of insurance when transporting goods to ensure their safety.
3. Risk coverage: Cargo insurance can provide customized protection for different types of goods (such as dangerous goods and perishable goods) to meet companies’ specific needs.

The main types of cargo insurance

1. All Risks: covers all risks unless expressly excluded in the policy. This is the most comprehensive type of insurance.
2. Named Perils: covers only the specific risks listed in the policy, such as fire, theft, or natural disasters.
3. Open Cover: suitable for businesses that regularly transport goods, providing continuous insurance for some time.
4. Single Shipment: insurance for a single shipment, ideal for companies that do not ship frequently.

How do you choose cargo insurance?

When choosing cargo insurance, companies should consider the following factors:

• Value and nature of goods: High-value or perishable goods require more comprehensive protection.
• Transport method and route: Different transport methods have different risks, and the corresponding insurance types should be selected.
• Insurance terms and exclusions: Read the policy carefully to understand which risks are covered and which are excluded.
• Insurance company reputation: Choose a reputable insurance company to ensure a smooth claims process.

How cargo insurance works

1. Purchase insurance: Select the appropriate insurance policy based on the type of goods and mode of transport.
2. Pay the premium: Pay the fee to activate the policy.
3. Submit a claim: If loss or damage occurs, submit a claim with the relevant documents (e.g., bill of lading, invoice).
4. Review and pay: After reviewing the claim, the insurance company will pay the claim according to the terms of the policy.

Related FAQS

What modes of transport does cargo insurance cover?

Cargo insurance covers Sea Freight, Air freight, Road Transport, and Rail Transport, as well as domestic and international logistics.

Is cargo insurance compulsory?

Although it is not compulsory, cargo insurance is essential for high-value goods or international trade and can effectively reduce business risks.

How is the cost of cargo insurance calculated?

Insurance costs are usually calculated based on factors such as the value of the goods, the route and mode of transport, and the scope of insurance coverage. The CIF+10% calculation method is generally used.

What risks can be covered by cargo insurance?

Insurance can cover fire, shipwreck, theft, accidental collision, natural disasters, etc., but it is necessary to check the specific policy terms.