How Much is Cargo Insurance and What Are the Limits?
Shipping can be a complicated process, and while new technologies and services make it much easier for freight to be transported across borders by land, sea and air, the need for insurance is just as important as it ever was.
Surprisingly, a great deal of cargo is uninsured despite the high risks companies face while goods are being transported. Also, many shippers find themselves in difficult positions when their cargo isn’t insured for particular journeys or locations.
The reality is that taking out insurance upfront before your goods begin their journey is always the best way to avoid the huge costs that you’ll face if your cargo is lost, damaged or stolen while in transit.
A great many cargo insurance claims are unfulfilled simply because shippers are not completely aware of the details of their policies. As such, it’s always better to diligently plan in advance and check the details of your policy before you start shipping any valuable cargo for your business.
What Does Cargo Insurance Actually Include?
There are many considerations that will affect your insurance policy. These include freight classification, cargo and prior loss history, which can all affect the type of policy you have and the amount you need to pay.
However, there are a number of certain commonalities within the freight insurance market so there’s no need for you to get too lost in endless quotes without having a good general idea about what you should or shouldn’t be paying for your policy.
Calculating the Cost of Cargo Insurance
Freight insurance costs are always dependent on the insurance company offering the policy. However, most insurers generally follow the same criteria when calculating the cost of your policy.
For example, the value of your cargo being shipped may be calculated based on the commercial invoice value of your items. Insurance companies will then calculate a base rate based on a percentage of the total value of your entire cargo, such as 10%.
This will determine a kind of benchmark that insurers will use to create your premium. However, policies that are set simply at the base rate won’t come with any unique features or considerations for your specific cargo needs. Most companies will then add costs based on the level of service they are offering and the specific features of your policy.
Do I Need Liability Cover Too?
While shippers are not legally required to have insurance for liability in place, freight carriers must have this as they are operating trucks on public roads. As such, these policies are generally designed to protect the carrier and not the shipper.
Keep in mind that you may not be covered by the policy of your carrier when it comes to certain cases of damage or loss while your cargo is in transit.
Protecting Your Cargo
Cargo insurance is a complex and dynamic aspect of the freighting industry. Standard insurance policies are not always the best protection for shippers and can leave you vulnerable to exposure while your goods are in transit from A to B.
To prevent your cargo insurance claims being denied, it’s recommended that you work with a professional advisor who can help you choose the right policy for your needs. And if nothing else, diligent research on insurance comparison sites is crucial for making sure you’re actually getting good value for money.
If you need help with your cargo insurance or are worried that your existing policy doesn’t actually protect you from all risks and dangers your shipment faces, get in touch with us at the Insurance Broker.