Cargo Insurance Insight | Goods Shipped By Water Face Multiple Unique Risks
According to Eagle Underwriting Group Inc., “International trade represents one of the largest and fastest growing industries in the world today. Many people, however, are not aware of the risks attached to the shipment of goods, and consequently the marine risk is often overlooked. For the logistics professional, whose business it is to move, store or clear goods, marine cargo insurance covers their customer’s interest, while reducing and protecting their own legal liability exposures.
Marine cargo insurance is somewhat different from other classes, and requires a knowledge of shipping, international geography, banking, transportation law, documentation, and economics. A knowledge of the basic principles, definitions, and coverage will provide a practical understanding of this area of international trade.
There are several types of risks that need to be identified and protected:
- Physical Loss or Damage to Cargo — Domestic and worldwide coverage for most types of cargo including general cargo, stock through-put, project cargo, manufactured goods, commodities, heavy-lift, valuable cargo, hazardous cargo, and perishable cargo.
- Stockthroughput Risks – Coverage for goods while in storage, which is useful for a company that imports, stores, and then distributes their cargo.
- Rejection Insurance – Covers the risk of rejection of the cargo by a governmental authority.
- Exhibition Risks — Often a customer sends their goods to a show to promote their product. Besides the transport to and from, their goods can be covered while at the show.
- Cargo Legal Liability — Coverage for various providers of logistics services for liability arising out of the operations of a freight forwarder, customs broker, warehousemen, trucker, aircraft operator.
- Professional Liability — Coverage for the professional liability of a load broker, freight forwarder, or customs broker.
- Political Risk — Refers to the negative consequences that result from the action or inaction of government, and provides coverage for assets in foreign countries, contract frustration and political violence.
- Supply Chain / Trade Disruption — Is a rapidly growing area of insurance, which covers the Net Profit or Extra Expenses due to non-arrival or delayed arrival of goods due to a disruption in transit. Can also cover loss of revenues due to delay in start-up (DSU) of cargo and ship building projects.
Things you need to know about cargo insurance:
- You are not limited to the restrictions of a carrier’s contract of carriage.
- You will protect your cash flow.
- You will have peace of mind that every shipment you have is insured.
- You are insured for the full value, including any profits if necessary.
- Coverage is placed on the right conditions, with terms that you have negotiated.
- Your interest is insured while you are financially at risk.
- Local and professional claims service means prompt and efficient claims handling.
- Minimal paperwork and simplified reporting.
There are new and emerging risks in international trade, and there are several unique insurance coverages that can protect your business.”1
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Source: 1 Eagle Underwriting