by Cargo insurance is a type of insurance that covers the loss or damage of goods while they are being transported from one place to another. It is purchased by exporters, importers, or freight forwarders to protect their goods against damage, loss, or theft during transit.
Cargo insurance can cover various modes of transportation such as sea, air, and land. The policy can be tailored to cover a specific shipment or multiple shipments over a specified period.
This is Types of cargo insurance, including:
- All-risk insurance: This type of insurance covers all risks of loss or damage to the goods except for those specifically excluded in the policy. All-risk insurance provides the broadest coverage and is the most expensive type of cargo insurance.
- Named perils insurance: This type of insurance covers only those risks that are specifically listed in the policy. The coverage is more limited than all-risk insurance, but it is also less expensive.
- Total loss insurance: This type of insurance provides coverage only in the event of a complete loss of the goods. It does not cover partial losses or damage.
- General average insurance: This type of insurance covers the expenses incurred by the carrier in the event of a general average loss. A general average loss occurs when goods are sacrificed to save a vessel or other cargo from a common peril.
- War risk insurance: This type of insurance covers losses or damages caused by acts of war, civil unrest, or terrorism.
- Strikes, riots, and civil commotions insurance: This type of insurance covers losses or damages caused by strikes, riots, or civil commotions.
Contract
A cargo insurance contract is an agreement between the insurance company and the exporter or importer to provide insurance coverage for goods in transit. The contract outlines the terms and conditions of the insurance coverage, including the types of risks covered, the premium to be paid, and the duration of the coverage.
The cargo insurance contract typically includes the following elements:
- Insured parties: The contract specifies the parties that are insured, such as the exporter, importer, or freight forwarder.
- Coverage terms: The contract outlines the coverage terms, including the types of risks covered, such as damage or loss due to theft, natural disasters, or accidents.
- Premium: The contract specifies the premium to be paid for the insurance coverage, which is usually based on the value of the goods being transported and the risks involved.
- Duration: The contract specifies the duration of the insurance coverage, which may be for a single shipment or for a specified period.
- Claims process: The contract outlines the process for filing a claim in case of loss or damage to the goods. This includes the documentation required to support the claim, such as the bill of lading, packing list, and proof of value.
- Exclusions: The contract may specify certain exclusions, such as losses due to war, terrorism, or other acts of violence.
Procedures and Documentation for Cargo Loss claims
The procedures and documentation for cargo loss claims may vary depending on the terms and conditions of the cargo insurance contract and the policies of the insurance provider.
It is important for exporters and importers to carefully review the terms and conditions of their cargo insurance contract to understand their rights and obligations in case of loss or damage to their goods during transit. They should also maintain proper documentation and follow the procedures outlined by the insurance provider to ensure a smooth and timely settlement of their cargo loss claim.
However, some general steps and documents that may be required in the process of filing a cargo loss claim are:
- Notification of loss: The exporter or importer must inform the carrier and the insurance provider as soon as possible after the loss or damage to the cargo is discovered. This notification should include details of the shipment, such as the date, origin and destination, type of goods, and the extent of the loss or damage.
- Proof of loss: The exporter or importer must provide documentation to support the claim, such as the bill of lading, packing list, commercial invoice, and proof of value. These documents should clearly show the type and quantity of the goods, their value, and the extent of the loss or damage.
- Inspection report: The carrier or the surveyor appointed by the insurance provider may conduct an inspection of the cargo to assess the extent of the loss or damage. The inspection report should be submitted along with the other documents to support the claim.
- Claim form: The exporter or importer must fill out a claim form provided by the insurance provider, which includes details of the loss or damage, the extent of the claim, and the supporting documentation.
- Settlement: Once the claim is verified and approved by the insurance provider, the settlement amount is paid to the exporter or importer. The settlement may be based on the actual value of the lost or damaged goods, the insured value, or a percentage of the insured value depending on the terms of the insurance contract.
Cargo insurance Benefit
Protection against financial loss: Cargo insurance provides protection against financial loss that may occur due to damage, theft, or loss of goods during transit. The insurance company will reimburse the insured for the value of the lost or damaged goods.
- Minimizes risks: Cargo insurance minimizes the risks associated with the transportation of goods. It provides peace of mind to both the buyer and the seller and reduces the financial risks involved in international trade.
- Compliance with legal requirements: In many countries, cargo insurance is a legal requirement for the transportation of goods. Having cargo insurance ensures that the company complies with the legal requirements of the country where the goods are being transported.
- Helps build trust with customers: Having cargo insurance demonstrates a commitment to the safety and security of the goods being transported. This helps build trust with customers and can lead to increased business opportunities.
- Covers a wide range of risks: Cargo insurance can cover a wide range of risks, including theft, damage, and loss due to natural disasters. This provides comprehensive coverage for goods being transported and reduces the financial risks involved in international trade.
