What is the Purpose and Aim of Cargo Insurance
The term CARGO is used for any goods transported from one place to another. If it travels on its own, it is not Cargo. It can be more simplified by giving an example of a car transported through a truck, railway, ship, or aircraft it will be counted as Cargo, and when you are making a trade that contains goods, the risk is always there. Cargo Insurance protects interests from physical loss and damage. It provides coverage against all the perils during the shipment due to any external cause. Simply Cargo Insurance offers economical protection for your trade. This Insurance’s responsibility starts when goods leave the warehouse or any storage place and finishes when the good reaches the destination.
Types of Cargo Insurance:
- Land Cargo Insurance
- Marine Cargo Insurance
Land Cargo Insurance:
This type of Cargo Insurance provides coverage for all kinds of Land Transportation, such as trucks and other small and huge vehicles. Land Cargo Insurance gives coverage for theft, collision damages, and other related damages. This Insurance operates within a nation, so it is domestic. Trade businesses on the domestic level require this Insurance to make their transportation of goods save and prevent themselves from losses.
Marine Cargo Insurance:
Marine Cargo Insurance covers transportation, such as ships and aircraft. It provides coverage from damages due to cargo loading and unloading, weather-related issues, and other relevant problems. This Insurance is mostly for Internal Transportations. This Insurance can help you in understanding cargo policies in a profound manner.
Marine Cargo Insurance Policies:
- Open Cover Cargo policies
- Specific Cargo Policies
- Contingency Insurance Policy
Open Cover Cargo Policy:
When Business holders decide to insure for different numbers of projects, they prefer to buy Open Cover Cargo Policy. This policy is further divided into two categories.
- Renewable Policy
- Permanent Policy
The renewable policy has opted for a specific period than it requires renewal after some fixed time. This policy is beneficial for Single trips or voyages, and the second one is the permanent policy. It can be drawn up for a decided period for countless shipments and projects
Specific Cargo Policies:
When a company decides to buy an Insurance policy for a specific consignment and project, then they for Specific Cargo Policy. These policies are also termed as voyage policies because it only covers shipments.
Contingency Insurance Policy:
In some cases, the seller is responsible for the Insurance of transported goods, and the Insurance of those goods is their responsibility. They are responsible for the loss and damage in this case, so the Contingency insurance policy is for sellers who have an actual premium rate. A seller doesn’t need to inform the buyer about this policy.
Why You Need Cargo Insurance or Advantages of Cargo Insurance:
Following are the benefits covered in this Insurance
- Damages due to inappropriate packaging
- Damages due to heavy weather ( sinking, derailment)
- Damages due to collision
- Employee’s dishonesty
- Custom rejection
- Cargo abandonment
If you own an import-export business, Cargo Insurance is big. Yes! for you as it provides benefits for local and international transportation. It will help you to transport goods in better conditions and under full safety measures. Every time you need to spend a big chunk of your money on shipping the products in this business, you must not ignore the importance of Cargo Insurance. It gives you coverage for all types of damages and losses, including damage caused by war, civil war, revolution, rebellion, general average and salvage charges, strikes, riots, etc.
Types of Cargo Insurance Coverage:
Different types of cargo insurance coverage are
- All Risk
- Free of Particular Average
All Risk Cargo insurance coverage covers all types of physical damage or loss from external causes, but there are some exclusions. It covers damages as collision because of an external source deliberate destruction, improper stowage by ship owners, theft, jettison, train derailment, truck overturning, and acts of God (e.g., earthquake, lightning strike).
Free of Particular Average:
FPA includes collision, stranding, burning, sinking, train derailment, truck overturning, and some acts of God. It does not include theft. FPA Insurance coverage or Free of Particular is also known as a Named Peril policy.
Shipment-by-shipment insurance coverages through the carrier who is shipping your goods, But there are some exclusions including defects in the transportation vessel, criminal acts on the part of the vessel’s crew, acts of God, and acts of war.
So should you buy Cargo Insurance Plan:
As all the details are mentioned above, and still you think that Cargo insurance is of no use for your business, you are on the wrong track. Every business needs Insurance for its safety, and Cargo is one of the Insurances that can help your business grow with success.