Understanding Cargo Insurance
Ensuring efficient and safe cargo movement is crucial, but international shipping is always susceptible to unforeseen
issues. Understanding the inherent risks and mitigating them with comprehensive cargo insurance is essential.
Investing in comprehensive coverage is a prudent decision that can mean the difference between weathering a setback and facing catastrophic losses. Protect your bottom line and give your customers the peace of mind they deserve by prioritizing cargo insurance as an essential part of your logistics strategy.
Isn’t the carrier liable?
Carriers limit their liability on all freight lost or damaged while in their possession, including in provable examples of negligence. These limits are based on the laws of the United States of America and International Law (including the Carriage of Goods by Sea Act (COGSA), the Uniform Commercial Code (UCC), and the Carmack Amendment (49 U.S.C. § 14706)) as well as international treaties such as the Montreal Convention (MC99).
Standard Carrier Limits of Liability
Understanding carrier liability's limitations can help you manage your expectations and plan for potential risks.
It's important to note that if a carrier can prove that loss was a result of something beyond their control, such as in the case of an extreme weather event, they are not obligated to pay anything.
-
$0.50 per pound
-
22 SDR (around $30 per KG
-
$500 per customary freight unit
What insurance options are available?
-
FPA policies are typically used to cover total loss/non-delivery. FPA is often selected for used merchandise, waste materials, and bulk cargo. It costs less because it’s coverage is limited to total loss or General Average Claims.
-
All risk pays out the actual insured value of the shipment (Cost, Insurance, Freight +10%) if your cargo is lost or damaged, no matter who is at fault. Like other forms of insurance, there is a deductible that may or may not be covered by the 10%.
Incidents covered by all risk insurance:
Theft/hijacking
Lost Cargo
Natural Disaster
General Average
Limitations of all risk insurance:
Light damage of non-containerized cargo (Marring/chipping/scratching)
Damage due to improper non-export packing
Rejection of Goods by Customs / Customer
Aside from risk due to damage or loss, insurance covers you in case of General Average Claims
General Average claims, which hold cargo owners liable for vessel damage, are increasingly common and expose uninsured cargo to substantial financial risk. Click below to learn more about General Average and the risks to your shipment.
Claims Procedure
Insurance can only be claimed after paying cargo freight charges in full and after going through the carrier claims process. It is very important that claims are handled promptly (a preliminary claim must be initiated within 10 days of the incident) and that each carrier’s specific claims process is appropriately followed.
Insurance payment requires an investigation and possible subrogation. Therefore, a properly documented chain of custody is critical. PODs and transfer documents with each handoff must clearly note any damage with photographs. More significant claims may also require a survey report.
To begin the claims process, please speak with your service representative.