Cargo insurance guide

If risk reduction and peace of mind are not incentive enough to insure your cargo, there are several other reasons you may want to invest in a cargo insurance policy.

When you’re importing goods from outside the country, the foreign manufacturer may have insurance for the cargo. However, their insurance policy will likely be through a locally-based provider, and if you end up having to file a claim for damages, the process can get complicated.

When you obtain your own insurance, you have U.S. federal and state laws on your side. In some cases, you may be required to purchase an insurance policy. Some smaller exporters require their customers to insure their freight as soon as it leaves the manufacturing facility. Many countries also require an insurance certificate for all goods entering their borders.

Types of Coverage

There are many different insurance policies available for cargo being transported by land, sea, or air. It’s important to look closely at what is covered and excluded in each policy so that you can choose the one that best mitigates your financial losses. Some of the most common types of cargo insurance coverage are:

All Risk: This type of policy typically covers any physical loss or damage from external causes, with some exclusions listed. Things this type of policy should cover include collision with an external object, jettison, train derailment, truck overturning, deliberate destruction, improper stowage by ship owners, theft, and acts of God (e.g. earthquake, lightning strike).

Peril Policy

Free of Particular Average (FPA): This is a Named Peril policy, which will list exactly what is covered. It is important to note that theft is usually not covered under this type of policy. The policy usually covers collision, stranding, burning, sinking, train derailment, truck overturning, and some acts of God.

Shipment-by-Shipment: This is insurance coverage through the carrier who is shipping your goods. There may be certain exclusions, including defects in the transportation vessel, criminal acts on the part of the vessel’s crew, acts of God, and acts of war. International Cargo Insurance: Global shipments create a greater potential risk of damage or loss.

Risk Mitigation

Insuring international cargo helps mitigate the risk for these shipments from piracy, hijacking, and other disasters, especially in more dangerous regions. How to File a Cargo Insurance Claim If you receive a shipment and discover that your goods have been damaged in transit, you should file an insurance claim as soon as possible. Here are the steps to take.

Note any shortages or damages on the bill of lading, being as detailed as possible. Do not give a clean receipt; a clean receipt is a statement that you have received your goods in an undamaged state, which could invalidate your insurance claim. Take pictures of the damage to the shipment.