If you are concerned about managing risk in your business, consider the value of cargo insurance for the basic protection of your goods when they are in transit.
With every shipment you make — after you pack correctly, hire a reliable shipping partner and double check your documentation — your goods are most vulnerable between the point of origin and final destination. It is during that time you must rely on a host of strangers who are handling your cargo.
And although it is generally true that most companies who transport goods carry liability insurance, it often does not cover many of the most common causes for loss.
So, what will purchasing cargo insurance do for you? Besides giving you peace of mind, consider that if you are importing or exporting your products or parts, cargo insurance protects your investment. Rather than having to pay to replace the goods you are shipping if they are lost or damaged enroute, cargo insurance is designed to cover your losses.
There are other advantages to consider:
- A buyer’s or sellers’ insurance coverage may be inadequate for your specific purposes, or you may find that the buyers and sellers are relying on you for protection. When you purchase your own policy, you can set the terms, the value and the coverage limits for each shipment. Then, if there is a claim, at home or with an insurer overseas, your insurance company will handle the negotiations and you can get on with your core business.
- In case of a “General Average” (the internationally accepted condition that when certain types of accidents occur in transit, all parties share equally in the loss) your freight may be held, even if it hasn’t been damaged. If you have your own coverage, your insurance carrier can arrange fast release of your cargo so it arrives on time and without further incident or expense to you.
- With some sales contracts you may be obligated to provide cargo insurance. If you do not have it and a loss occurs, you may face legal action and lose the confidence of your clients.
- If a ship or cargo is confiscated due to an unlawful act, and the police seize your cargo, you’ll need insurance to cover your loss.
- In case of a collision in a fog-covered shipping lane, or a natural weather event that damages cargo, you’ll want coverage, as you will if piracy occurs or a foreign government deliberately destroys the ship or its cargo.
“In our view” says Dan Cser, owner of ICAT Logistics Detroit, “purchasing ample cargo insurance is a no-brainer. Too often, we’ve seen what happens when a company cuts corners and foregoes proper insurance coverage. On a big shipment, with an important client, one major loss can mean the difference between a profit or loss for the entire year.”
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