Cargo insurance, also known as marine cargo insurance, is a crucial aspect of organizing cargo shipments. It provides protection against risks associated with damage or loss of cargo during transit. The aim of cargo insurance is to secure the transported goods from financial risks resulting from physical loss or damage.
What Does Cargo Insurance Cover?
Cargo insurance encompasses protection of cargo from the point of loading until it reaches the final destination, and includes coverage at transshipment points if required. For businesses involved in transporting goods, minimizing losses from damage or loss of cargo is essential, and insurance coverage is the best solution for this issue.
Cargo insurance can cover various modes of transport (in this case it's called "marine cargo insurance"), including land, sea, inland, air, and rail freight. It primarily addresses physical damage resulting from unforeseen events and the liability of carriers for damage during transportation.
Why is It Worth Getting Cargo Insurance?
Transporting goods is a necessary activity for the smooth functioning and continuous development of the economy. Nowadays, cargo shipments occur on a large scale, making it inevitable that some shipments may suffer damage. Hence, carriers incur less financial loss if they have transport insurance. Cargo insurance is a key aspect of the transportation process, as it helps avoid bearing the costs of damage to goods.
Types of Cargo Insurance Policies
- Single-Trip Policies: These are arranged only for a specific shipment. Typically used when there is no need for continuous insurance coverage.
- Annual Policies: Provide a fixed 12-month coverage for shipments. These policies only cover shipments declared before transport begins. The policy rate is fixed and determined before signing the contract.
- Rolling Policies: Function similarly to annual policies but do not require the client to declare each shipment separately.
Limited Liability Insurance
Limited liability insurance provides protection against a specific range of risks, usually covering basic threats. It may exclude certain events, such as damage from improper packaging, moisture, or acts of war. This type of insurance is generally less expensive but offers a narrower range of protection.
"All Risk" Insurance
All risk insurance offers broad protection against nearly all types of risks that may occur during the transportation of goods. Although the cost of such a policy is higher, it provides comprehensive coverage, reducing the risk of financial losses for the cargo owner.
How to Choose the Right Cargo Insurance
Selecting the appropriate cargo insurance depends on several factors:
- Scale of Transport: Determine whether the transport is domestic or international.
- Value and Type of Goods: Higher value goods require higher premiums due to the potential for greater financial losses. Valuable goods may also need additional security measures and more comprehensive insurance policies.
- Cargo Insurance Sum: Typically based on the value of the cargo as specified by the owner and may include additional costs like freight, duties, or other transport-related fees. Accurate determination of the insurance sum is crucial to ensure full coverage and avoid underinsurance, which could result in insufficient compensation in case of a claim.
- Risk Analysis: Assess the specific risks associated with the transport of the cargo, such as climate conditions, economic development in the countries of transit, and infrastructure quality in the transport sector.
Who Needs Cargo Insurance?
Cargo insurance is intended for various parties involved in cargo transport:
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Cargo Owners
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Freight Forwarders
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Carriers
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Goods producers
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Insurance Brokers
Cargo insurance is beneficial for anyone who could potentially incur a loss due to damage or loss of cargo.
What is the scope of Cargo insurance?
There are two different divisions according to the type of risk and according to the scale of protection:
Property insurance in transport is used in response to threats resulting from losses that the carrier may incur due to the occurrence of:
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random events,
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Damage to the shipment during loading and unloading,
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Accident of a means of transport,
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Cargo theft.
The insurance covers:
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Basic scope - random events (e.g. lightning strike, earthquake and other weather phenomena), transport accident, robbery, intentional damage and as a result of force majeure;
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Extended scope - basic risks and damage resulting from cargo theft;
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Full scope - basic and extended risks and damage resulting from other random causes.
What won't cargo insurance protect us from during transport?
The insurance protects many forms of products, such as raw materials, semi-finished products and finished products. However, live animals, works of art and documents cannot be insured.
Shipment items that have been improperly prepared for transport by the carrier are also not covered by insurance. Therefore, as a carrier, you should control, for example, how the cargo is packed.
Do you want to secure your cargo? Take advantage of AsstrA's offer
AsstrA AG offers comprehensive "all risks" cargo insurance or limited insurance for its clients. This insurance is concluded with renowned Swiss insurance companies such as Basler Versicherung, Zurich Insurance Company Ltd and Aktiv Assekuranz, as well as with national insurance companies in the CIS.
We provide insurance for your cargo during:
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Transit storage in warehouses,
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When reloading goods from one means of transport to another,
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When loading your cargo in the sender's warehouses and unloading it in the recipient's warehouses,
Usually, the franchise, i.e. the unpaid part of losses, is equal to zero, i.e. all losses, even the smallest ones, will be fully compensated by our insurers.
Insurance rates:
The initial insurance rates for your cargo are 0.25% - 0.35% of the insured value of the cargo and may vary depending on the value of the cargo and the number of cargo transported. If our cooperation develops successfully, we are ready to negotiate a reduction in the above insurance rates.
Insurance options:
Your cargo can be insured according to one of three variants for the invoice value of the cargo: for 110% of the invoice value of the cargo, for the invoice value of the cargo + freight, for 110% of the invoice value of the cargo + freight. In addition, we are able to provide insurance for all the client's transports, even if they are carried out with different carriers.
Cargo damage:
Employees of the AsstrA cargo insurance department provide assistance in organizing the inspection of damaged cargo, collecting documents necessary for the company to pay insurance compensation, and conducting negotiations with the insurance company. We make sure that our clients can quickly solve problems when insurance accidents occur, which is why we provide preliminary written instructions.
Advantages of our company when providing insurance:
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Experience,
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Favorable prices,
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Convenient insurance policies,
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Negotiations,
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Help with compensation,
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Elimination of losses.
In order to obtain information about a specific rate or any other information regarding cargo insurance, we suggest completing the form on the website https://asstra.com/ or contacting the offices of the AsstrA holding. Our specialists will provide you with the necessary information.
Frequently Asked Questions About Cargo Insurance
What is Cargo Insurance?
Cargo insurance is a type of insurance policy designed to protect businesses from financial losses associated with the transportation of goods. It provides coverage for cargo owners, freight forwarders, and other parties involved in the supply chain, ensuring that goods in transit are protected against risks such as theft, damage, or loss.
What Does Marine Cargo Insurance Cover?
Marine cargo insurance covers the physical loss or damage to goods while they are being transported by sea, air, rail, or road. This insurance policy is particularly crucial for businesses that rely on sea freight to move raw materials or finished products. Marine cargo insurance protects against a range of risks, including natural disasters, piracy, accidents, and other perils associated with sea transportation.
Why Should I Consider Purchasing Cargo Insurance?
Purchasing cargo insurance is essential for businesses that want to safeguard their cargo shipments against potential losses. Without adequate insurance coverage, companies may face significant financial risks if their goods are damaged, lost, or stolen during transit. Insurance brokers can help businesses arrange insurance policies that meet their specific needs and ensure that they are fully protected.
How Do I Obtain Marine Cargo Insurance Quotes?
To obtain marine cargo insurance quotes, businesses can contact an AsstrA insurance specialists. These professionals can provide general information about available coverage options and help clients choose the best policy for their cargo shipments. The cost of the policy will depend on several factors, including the nature of the goods, the value of the shipment, the mode of transport, and the destination.
What Are the Benefits of Cargo Insurance?
The primary benefit of cargo insurance is the financial protection it offers. By insuring their goods, businesses can mitigate the financial risks associated with transporting goods. If a shipment is lost, damaged, or stolen, the insurance policy will cover the costs of the loss, ensuring that the business is not left to bear the full financial burden. Additionally, having insurance arranged by AsstrA can enhance a company's reputation by demonstrating its commitment to protecting its customers' interests.
What Risks Are Covered by Cargo Insurance?
Cargo insurance covers a variety of risks associated with transporting goods. These may include:
- Physical loss or damage due to accidents, collisions, or natural disasters.
- Theft or piracy.
- Damage during loading or unloading.
- General average, which involves the shared financial responsibility for losses incurred during a maritime emergency.
Are There Any Exclusions in Cargo Insurance Policies?
Yes, cargo insurance policies often come with exclusions, which are specific situations or events that are not covered. Common exclusions may include:
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International sanctions that prevent the shipment from reaching its destination.
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Damage or loss due to insufficient packaging or improper handling.
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Delays in delivery that do not result in physical damage.
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War and terrorism-related incidents unless specifically covered.
It's crucial to carefully review the terms of your insurance policy and discuss any concerns with AsstrA insurance specialist to ensure that your specific requirements are met.
Who Should Be Responsible for Arranging Cargo Insurance?
The responsibility for arranging insurance can vary depending on the terms of the contract between the buyer and seller. In some cases, the seller may be responsible for insuring the goods until they reach the buyer. In other instances, the buyer may need to arrange insurance once the goods are handed over by the seller. It's essential for all parties involved in the shipment to clearly define who is responsible for insuring the cargo.
How Does Limited Liability Affect Cargo Insurance?
Freight forwarders and carriers often have limited liability for the goods they transport. This means that if the cargo is lost or damaged, the compensation provided by the carrier may be limited to a specific amount per kilogram or unit, which may not reflect the full value of the goods. Cargo insurance provides an additional layer of protection, ensuring that businesses are fully compensated for their losses.
What Is General Average, and How Does It Affect Cargo Owners?
General average is a maritime law principle where all parties involved in a sea voyage share the costs associated with a voluntary sacrifice of part of the ship or cargo to save the entire voyage. For example, if cargo is jettisoned to lighten the ship during a storm, all cargo owners may be required to contribute to the loss, regardless of whose goods were actually sacrificed. Having a cargo insurance policy can cover these contributions, protecting cargo owners from unexpected financial obligations.