Cargo insurance is a form of insurance that covers the protection of all risks and losses for a freight during shipping from air, land, sea or rail. The types of coverages can vary from product to product as some insurances can cover deliveries from door-to-door while others cover from warehouse to warehouse. Hence, customers can choose from a number of available products to meet their needs at the moment.
Why you will need cargo insurance
In this day and age, some might be wondering why incur additional expenses by purchasing cargo insurance. All it does is to eat into profits. However, in times of uncertainty, when unexpected events are on rise, you do not want to sustain losses due to damaged or lost goods. As such, these are some compelling reasons to purchase cargo insurance:
According to BSI’s Supply Chain Risk Exposure Evaluation Network, one of the largest issues for the global shipping industry in 2015 was due to cargo theft which amounted to an estimated cost of $22.6 billion. One of the reasons that cargo theft occurs is due to criminal rings targeting goods in transit. Some collude with truck drivers to steal an entire container worth of goods or use fake identities to perform a heist on cargo.
Natural disasters such as earthquakes and tsunamis are good examples as they can affect both ships as well as ports. This may result in a loss of entire ships carrying a full load of containers. Other incidents could involve political tension or acts of terrorism whereby shipments could be delayed by on-going labour strikes or ports being targeted by terrorists.
On-going piracy acts have often led to financial losses for both importers and exporters as trade vessels were robbed of all of their goods.
Another factor that cannot be discounted is the number of goods damaged in transit. Damaged goods often result in losses as these goods are no longer fit for sale. The damages could be physical in nature or temperature-related and can be due to infestation, contamination or mishandling of goods.
Loss of Goods
Sometimes, in the event of bad weather, certain containers may be jettisoned to ensure the buoyancy of the ship. In addition, containers may also fall off if they are not secured properly.
Who needs cargo insurance protection?
All importers and exporters, especially if the goods are: