What is Air Freight Insurance?
Air freight insurance refers to official documentation that guarantees compensation in the event of loss or damage of shipments through air.
Factors to consider before using Air Freight Insurance
Cost
Given the speed that comes with air freight, it costs relatively higher as compared to sea freight.
Time
Air freight transportation usually takes only a few days to ship freight and is hence a relatively fast shipment mode. Time-sensitive goods would be more efficiently shipped via air freight.
Capacity
Air freight is not as suitable to transport freight that is larger in quantity or size due to the limited air cargo space.
Reliability
Planes operate by daily flights, therefore in the case where a flight is cancelled, it would not cause much of a delay. Freight would reach its destination as scheduled most of the time.
Main types of Air Freight Insurance Coverage
"All Risk" Coverage
An “All-Risk” insurance policy is the most extensive one as it provides coverage for many aspects, in the case where there is loss or damage caused by external factors. Some aspects that are covered would include collision, explosion, leakage and breakage. However, not all perils are covered – some of the excluded ones are improper packing, rejection of goods by custom authorities as well as used goods.
Free of Particular Average (FPA) Coverage
FPA is applicable to certain products such as used goods and waste materials. FPA covers partial and total losses and its coverage include sinking, burning, explosion and so on. Unlike “All-Risk” Coverage, however, FPA does not cover losses due to leakage and breakage, for example. Losses resulting from heavy weather are only covered when there is a partial loss.
With Average (WA) Coverage
WA coverage is an extension of FPA coverage such that it includes losses due to heavy weather. Both FPA and WA can be further extended to include other coverage such as theft.