Legally, all carriers must carry a minimum amount of insurance, known as carrier liability. However, carrier liability provides very limited coverage, and anything from natural disasters to vehicle accidents or even acts of war could damage your cargo. Therefore, shippers can request cargo insurance to protect their goods from loss, damage, or theft while in transit. Generally, goods are insured while being stored and while in transit, until they reach the buyer.
Types of cargo insurance:
Inland Cargo Insurance: This insurance provides coverage for all the land transportations covering trucks and other small utility vehicles. The coverage aspects are theft, collusion damages and other related risks. This insurance is domestic in nature and normally, operates within the boundaries of the nation.
Marine Cargo Insurance: This insurance covers transportation carried our either in sea or by air. Here, means of transportation and goods are covered from damage due to cargo loading/unloading, weather contingencies, piracies and other relevant issues. Mostly, this insurance covers international transportation. Under these insurances, there are some policies which can help you in understanding the concept of cargo insurance in a profound manner. These policies are:-
- Open Cover Cargo Policies: When insurance holder opts for coverage against various consignments, then open cover cargo policies get activated. These policies are segmented in two categories namely renewable policy and permanent policy. Renewable policy is required for a particular value requiring renewal after policy expiration. Most of the single trip or voyages fall under this category. Permanent policy can be drawn up for a decided time period permitting countless shipments in that period.
- Specific Cargo Policies: When a company approaches an insurance company or broker for insuring a particular consignment, then it can fall under the category of specific cargo policies. These policies are also termed as voyage policies because only shipments are covered under them.
- Contingency Insurance Policy: There are certain cases where customer, not the seller is responsible for insuring the goods against loss or damage. There are perils associated with it if goods get damaged during transit and customer refuses to accept them. In few cases, some customers do not insure the goods and tend to avoid the liability. Under such circumstances,
affected sellers can seek rectification with the help of the legal system. This can be very costly for them and sometimes, they may lose the case. Therefore, sellers are advised to go for contingency insurance which have a very less premium rate. For testing and verification, sellers need not tell about it to their customers.
- Air Cargo Insurance: A type of insurance policy that protects a buyer or seller of goods being transported through the air. Air cargo insurance is designed to protect the insured against items damaged, destroyed or lost. Cargo insurance is offered through insurance companies, some freight forwarders and trade service intermediaries. The amount of coverage and deductible
required with this insurance varies, with each insurance provider. A premium for the cargo is often calculated based on the value of the item, whether the item is hazardous, where it is being transported and the route that will be taken to reach its destination.