Cargo insurance provides essential coverage for the loss or damage of goods while in transit. Although it requires an additional investment, it offers peace of mind by compensating for potential losses. Let’s delve into the technical aspects of cargo insurance to understand why it is crucial.
Cargo insurance generally covers the total or partial loss or damage of insured goods during transportation, provided all necessary requirements are met. However, it’s important to note that not all types of loss or damage are eligible for insurance claims.
Two key concepts of insurance also apply to cargo insurance: insurable interest and perils insured against. Insurable interest means that you must have a financial stake in the goods being transported. The cause of the damage or loss must align with the perils covered by the insurance policy. It is vital to carefully review the policy and clarify the events or circumstances covered to ensure adequate protection.
Timely filing of a claim is another critical consideration. Insurers may require inspection of the cargo upon delivery or within a specified timeframe. It’s important to adhere to these guidelines and promptly notify both the carrier and the insurance provider of any damage or loss.
Determining ownership is crucial when selecting cargo insurance. For international transactions, it’s essential to identify the segment of the supply chain where you are considered the “owner” of the goods. Terms such as “FOB Origin” and “FOB Destination” define ownership transfer points. Understanding these terms ensures that you purchase cargo insurance that covers the relevant stage of the supply chain.
Contracts and stipulations between buyers and sellers play a significant role in cargo insurance. If both parties agree on liability allocation, those agreements are legally binding.
Choosing between a specialized cargo insurance provider and a general insurance provider depends on various factors. Cargo insurance providers specialize in this field and possess in-depth knowledge. However, opting for a provider that offers multiple types of insurance can provide discounts and convenience. Ensuring that your provider understands supply chain management and processes is crucial for making an informed decision.
