What Is Cargo Insurance and Why Is It Important | C.H. Robinson

Cargo insurance statistics

If you ever realize how many things could go wrong when shipping goods around the world, you should consider getting cargo insurance, where your goods are covered during transit and certain risks are mitigated.

What is general average?

If a fire or any other exceptional sacrifice or expense takes place, the carrier has the authority to declare general average. In such a scenario, all individuals with cargo on the vessel might be obligated to contribute to the cost of the expense. In this case, a maritime carrier encounters a fire or some other extraordinary sacrifice or expenditure.

Your cargo will not be released until the ocean carrier declares general average and calculates the salvage security and general average deposit. This process can be time-consuming and expensive. To illustrate, they had to pay nearly $50,000 USD to release their cargo from the container, despite its value being only $100,000 USD.

What is cargo insurance?

Shippers or consignees have the option to buy policies in the insurance market from a variety of sources, such as niche providers, large brokers, local agents, websites, and freight forwarders. The inclusion of cargo insurance for all shipped goods may vary depending on the region. To safeguard the value of your goods against physical damage, theft, or general average, marine cargo insurance is widely utilized.

I often compare cargo insurance to car insurance. You pay for insurance coverage on your car because accidents and theft occur. You simply can’t always plan or avoid these types of situations. Even after years without any problems, you’re still willing to insure your car. After all, getting only the most basic coverage could leave you losing a significant amount of money if an accident were to happen.

It is the exact same principle of insuring cargo by choosing to pay a small fraction of the value of your goods to protect yourself unexpectedly on that day.

Is cargo insurance a requirement?

It is highly recommended to weigh the costs of insurance with the potential losses and collateral damage that could occur without insurance. It is important to protect your goods from some risks and exposure, so buying cargo insurance is highly recommended even though there is no requirement to do so.

If you do not have proper insurance, you could lose a big part of your valuable cargo. Therefore, you can imagine that most freight carriers charge much higher rates than USD $24.00 (around SDR 19 per kilo). And air freight carriers are only liable for much less, whichever is lower – the actual value of the goods, the customary shipping unit, or USD $500 per package. Keep in mind that even if you can prove that an ocean carrier is liable, their liability limit is legally set at USD $500.

Can I make a trade deal with my buyer or supplier?

If you choose to pursue this type of coverage, it is important to always closely examine their policies to ensure that they sufficiently cover your cargo. They are only obligated to provide minimal coverage under CIF (freight insurance and cost) and may not provide enough coverage when dealing with suppliers or buyers in a trade.

Who is liable for damage?

Some of the most common types of damage that are not the carrier’s liability include accidents at sea, strikes, acts of God, and fires, as well as the insufficiency of packing and the possibility of freight being difficult to prove legally due to these regulations.

It can be difficult to trace where damage occurred or who is liable for the damage, making it necessary to have insurance coverage for your cargo. Many handling companies are responsible for the transit and storage of your freight, so it is important to ensure that you are covered for any potential losses or damages.

Top 3 qualities to look for in a quality cargo insurance provider

There are many companies that offer insurance cargo, so you may need to do some research to find the right one for your business. Just because an insurance provider has the highest rates doesn’t always guarantee that they will provide the best coverage you need. It’s important to care about who your provider is and why Robinson C.H. Works hard to provide the best freight coverage.

  • The right cargo insurance provider will offer a variety of flexible policies based on your needs. And with low or no deductibles.
  • While your goods are in transit, you can find a provider who offers coverage against physical damage or loss, providing financial protection for all your commodities according to standard coverage.
  • With plenty of qualified insurance teams, you can rely on experts to guide you through the process of quickly resolving claims and navigating the complicated regulations and rules that help insurance providers and cargo insurance purchasing.
  • Protecting freight against loss

    You can’t always safeguard your cargo from loss. In reality, the quantity of containers lost at sea annually is astounding.

    The good news is that insuring your goods can protect the value of your goods against potential losses that can happen during transit, whether it’s shipments by rail, ocean, or air.

    It can be challenging to understand how insurance works and how it can help mitigate the risks of shipping. This post will explain the key information and regulations surrounding cargo insurance, which can often confuse and complicate the topic. Shippers frequently misunderstand how liability works in the event of goods being lost, which can further complicate matters.

    Protect the value of your goods

    This is simply a brief summary of the crucial significance of cargo insurance for your freight. Get a complimentary copy of our white paper, “Global Shipping: Safeguarding the Value of Goods,” for further details on cargo insurance.

    Are you looking to connect with one of our cargo insurance experts to find out if our insurance services are available in your region? Now, in need of cargo insurance.

  • Average annual number of container losses from 2008 to 2016. Source: http://www.Worldshipping.Org/news/articles/2017/07/10/containers-lost-at-sea-2017-update.
  • Source http://www.Worldshipping.Org/news/articles/2017/07/10/containers-lost-at-sea-2017-update.
  • Robinson C.H. Does not guarantee, represent, warrant, or warrant the accuracy, completeness, or fitness for any particular purpose of the information contained herein. However, every effort has been made to compile the information in this blog with the utmost care, and no rights whatsoever can be derived from its contents.