- Sell goods over the Internet?
- Import or export raw materials or finished products?
- Manufacture or sell finished goods overseas?
- Store products in an overseas warehouse?
- Participate in overseas exhibitions?
If your answer is yes, you probably have a cargo insurance exposure.
What is Ocean Cargo Insurance?
Goods in transit need to be insured from an inland point of origin to a final inland destination and all points along the way. Most of the time, this is accomplished with one policy so there is no question as to which policy is in force at any given time. The coverage can be provided on an individual basis as each shipment is made or under a Marine Open Cargo Insurance Policy. Cargo insurance can be purchased by the buyer, seller, consignee or freight forwarder. Transit insurance is from warehouse to warehouse, or as required by the terms of sale, or by a specific country’s insurance requirements. Coverage can be extended for domestic and overseas inland transit, warehouse storage, exhibition and installations. We also provide shippers’ interest and legal liability coverage for freight forwarders, logistics providers and Non-Vessel Operating Common Carriers (NVOCC). Companion War policies are offered. Strikes, riots and civil commotions, as well as Terrorism Risk Insurance Act (TRIA) coverages, are also available.
Our policy provides coverage for all legal shipments traveling around the world. We prefer to have knowledge of the assured’s primary areas of trade and rates are generally based on those trade areas. Furthermore, U.S. laws or restrictive insurance legislation of another country may affect whether or not coverage may be provided.
Limits of Liability
The limits of liability for a Cargo policy are determined on a per conveyance basis; for example, $500,000 per vessel or per aircraft and connecting conveyances. Because of the increased risk of shipping goods directly on deck of a vessel, a sub-limit may apply to cargo shipped on deck and may be subject to an on-deck bill of lading. Containerized shipments are considered under deck because they are shipped subject to an under deck or optional bill of lading that requires more responsibility by the carrier and permits more subrogation by the insurance company. Premium is not usually based on the limit but rather on the actual values shipped.
Common Misconceptions About Cargo Insurance
I use a freight forwarder so I’m already covered.
The freight forwarder’s policy is geared to many different commodities and many different customers, providing non-tailored coverage usually at a much higher cost.
Nothing could ever happen to my goods.
Your goods may be less susceptible to loss than others but they still have the risk of catastrophic loss and loss due to “General Average,” which is a sharing of a loss that occurs to the hull or other’s cargo. If a General Average is declared and you do not have insurance, you will be required to post a cash bond before receiving your goods.
I’m not big enough.
Accessible Marine Insurance has reasonable minimum premiums for Open Cargo policies and the availability of insuring just the occasional shipment.
The carriers are insured so I don’t need coverage.
Carriers are usually only responsible for loss or damage due to their negligence. In addition, law or tariff restrictions limit the liability of most carriers.
My buyer or supplier buys the insurance.
Foreign insuring conditions can vary widely from U.S. policies. Importers know exactly what they get when they buy insurance locally. Further, the cost of insurance purchased overseas is often hidden with other charges. What are you are really paying?