Common Commercial Cargo Insurance Coverage Mistakes

Common Commercial Cargo Insurance Coverage Mistakes

Commercial cargo insurance coverage is a niche area of commercial insurance which requires an insurance broker to have good understanding of a clients shipping, receiving and transportation activities.  In addition to understanding their clients operations an insurance broker also needs to have a good technical understanding of commercial cargo insurance coverage products so they can place the appropriate coverage and avoid common commercial cargo insurance coverage mistakes.

Common Commercial Cargo Insurance Coverage Mistakes To Avoid- Deterioration coverage

For the most part, cargo insurance is written using the Institute Cargo Clauses, like ICC(A) which is an “all risks wording” meaning that a loss within the scope of coverage is included unless it’s specifically excluded.  One common exclusion is for Inherent Vice which is an exclusion found in most property and cargo  insurance policies that eliminates coverage for loss caused by a quality in property that causes it to damage or destroy itself. Not properly understanding the potential impact of this this exclusion is one of the most common commercial cargo insurance coverage. It typically becomes an issue when organizations are involved in shipping of frozen food because if not endorsed properly a common commercial cargo insurance policy will exclude coverage for goods damaged as a result of spoilage which could be caused by a number of reasons including, but not limited to the breakdown of refrigeration equipment and machinery.  To ensure this does not become a common commercial cargo insurance coverage issue for for you organization it’s important to work with experienced insurance brokers like those at ALIGNED Insurance who would ensure a the appropriate frozen food extensions are endorsed to the policy.

Common Commercial Cargo Insurance Coverage Mistakes To Avoid- Inter-company sales/shipments

Another common commercial cargo insurance coverage mistake is overlooking and not appropriately insuring inter-company sales and shipments.  Most insurance brokers will ask about shipment coming in from and going out to other companies, but will often overlook a risk significant exposure which are shipments within a company. This common commercial cargo insurance coverage mistake can be easily avoided by have the insured report their inter-company sales/shipments and getting written confirmation from the underwriter that inter-company sales/shipments are covered and have the policy noted accordingly.