Cargo shipping insurance – why do you need it?
Shipping items overseas always carries risks. You might be scared they are going to get lost or damaged, or stolen. Then, you might be worried about how global forwarding services treat your packages. There are many things you can do to counter this. You can find freight forwarders you can trust and you can pack your items securely. Finally, you can get cargo shipping insurance. But then you may wonder what cargo shipping insurance actually is, how it works or whether or not you really need it. Luckily, we have your back! In this article, find out the answers to all your burning questions!
What is cargo shipping insurance
Depending on the country, carriers are usually legally required to carry a level of insurance. This is called carrier liability. However, this insurance is often minimal, and anything can damage your shipments – from natural disasters to vehicle accidents. This is why many shippers request additional shipping insurance.
This is called cargo shipping insurance, and depending on the package, it protects the goods from damage, loss, and theft. The goods are insured from the moment they leave the shipper, all throughout the packing and transporting phases until they reach the buyer.
There are many types of cargo shipping insurance. Each of them protects your goods from varying degrees of damage or theft. This is why you need to talk to your cargo export Japan services. They will have various policies for you, and you can tailor them to your needs. However, be sure to read through each contract very carefully before you sign anything.
Types of cargo shipping insurance
There are various types of cargo shipping insurance. Doesn’t matter if your cargo will travel to another country or never leave yours – you can take insurance for either. However, classifying insurance for your cargo can sometimes be difficult. This is because a lot of policies differ from one country to the other. However, when talking about modes of transport, we can notice two groups of insurance:
- Land cargo shipping insurance.
- Marine cargo shipping insurance.
Land cargo shipping insurance
This is usually the insurance you will take when you transport your goods within your country borders. The reason for this is simple – the local law applies only in your own country. Land cargo insurance also depends on the vehicle you will use. It covers truck insurance as well as other small utility vehicles. This insurance also covers cases of theft, collision damages as well as similar travel risks.
Marine cargo shipping insurance
This insurance covers the other modes of transport. All you need to do is choose between air freight or ocean freight. The protection includes the loading and unloading of cargo, as well as weather and environmental conditions, piracy and similar things that can happen. This is what you will usually use for international transportation of your cargo. There are many policies that you need to understand in order to properly utilize this type of insurance.
Specific marine cargo policies
Open Cover Cargo Policies are there when you want to protect your cargo from various consignments. There are two categories of these policies that you need to think about – the renewable and the permanent policy. If you want to renew your policy after some time, you will use the renewable policy. You will use this for single trips or voyages. However, if you want insurance to cover cargo shipping over some periods of time, then you should go for the permanent policy. You will draw up a time period and you will renew this policy after that’s over.
Specific Cargo Policies these are for when you want to protect a particular consignment. Sometimes, you will also find these policies under the name of voyage policies because they cover only shipments.
Contingency Insurance Policy is used when the customer wants insurance against loss or damage, instead of the seller. Sometimes, goods can get damaged during the transport. Once they arrive, the customer can refuse to accept them. There are cases where the customer doesn’t get insurance for the goods and thus avoids the liability. Because of this, the sellers can seek justice within the legal system. This takes both money and time, not mentioning that you can lose the case. The solution is to get contingency insurance. Depending on where you are, you might not even need to tell the buyers about it.
Types of coverage of cargo shipping insurance
Cargo shipping insurance can also differ based on what it covers. The following types generally apply to all modes of transport – either by land, air or water.
All risk coverage
All risk coverage gives you protection against external factors. It includes both damage or loss or the cargo. And even though the name suggests the coverage of all the risks, you still need to inform yourself about its range. So, all risk coverage includes damages that happened because of inappropriate packing, as well as an infestation, the abandonment of cargo. It covers you if the customs reject the cargo, and finally, it protects you against employee’s dishonesty.
Free of particular average coverage
Free of particular average coverage includes the damages of cargo due to stranding, sinking, burning or collision. The shipper also doesn’t pay for minor losses. They are only liable for the significant ones. This is one of the special coverages, meant only for particular perils. What’s more, depending on the location of the cargo (for example, there are some air cargo restrictions), there are different coverages, too. This type of coverage includes heavy weather, derailment, non-delivery, theft, fire, and earthquake damage.
General average coverage
General average coverage is one of the basic requirements when shipping cargo through sea or air. However, it only covers partial loss or the shipment. All the other cargo holding owners that are using the ship need to pay compensation to the owner of the cargo with damages.
Warehouse to warehouse coverage
You use the warehouse to warehouse coverage when you are shipping cargo to a customer’s warehouse. The insurance companies here look carefully over the policies. They will compensate only the person holding the cargo shipping insurance, and not the person that owns the cargo.