Shipping & Cargo Insurance
Always Consider Shipping & Cargo Insurance
When your company ships valuable assets, the most crucial “insurance policy” is to work with a leader in a specialty, custom crating, packaging, and shipping. Still, no single company can control each element of a crate’s journey from origin to destination. The shipping experience can be tough with a negative impact from a wide array of forces and environmental conditions.
Therefore, it is possible for even the most securely packed items to become damaged during transportation. A business should always consider that possibility even if the risk is extremely low. One of the best methods is to carry adequate cargo insurance.
What Is Cargo Insurance?
Merriam-Webster defines cargo insurance as “insurance against loss resulting from damage to goods in transit by motor truck.” The definition may apply to many types of transportation, not just motor trucks.
Insuranceopedia goes further: “Cargo insurance protects the owner or consignor of goods for possible physical loss or damage from outside causes during shipping. The insurer would reimburse the policyholder for the value of the goods if they incur damage or perish while in the hands of the shipper. It is often available from the shipping company itself, or it may be purchased from a third-party insurer as well.”
Put simply, cargo insurance pays your company financial compensation if your shipment is destroyed or damaged during transportation to its destination. Your company can work with an insurance provider of its choice, or the crating and shipping service provider may recommend a preferred provider.
Types of Cargo Insurance Coverage
There are four primary categories of cargo insurance:
- Standard cargo insurance. This insurance policy protects assets from loss or damage related to nearly any type of insurance risk. It is sometimes called “all-risk” coverage. Standard cargo insurance may cover most shipped items such as equipment, machinery, furniture, artwork, and electronics.
- Limited liability insurance. This is also called “lost only” insurance coverage. It is used when clients pack their own items. It does not cover visible or concealed damage to items. However, it offers protection if a full container or entire shipment is stolen or goes missing.
- Job Service Order (JSO) insurance. JSO insurance covers only the packing process. Items may be packed in a crate or corrugated box, and the coverage typically applies only to local transportation. Items shipped by a common carrier are not covered.
- Used electronics & machinery insurance. This coverage applies to items over one year old, and it typically covers only visible damage.
Cargo Insurance Endorsements
Endorsements are also called riders, and it is important to be educated on the concept of cargo insurance endorsements. They add to, delete, or modify the terms of coverage from the base policy. For instance, one item within a large shipment may be considerably more expensive than the others. The business might purchase a rider to add protection for that single item. Endorsements are a great way to customize an insurance policy to your specific needs.
Cargo Insurance That Meets the Needs of the Business
When purchasing cargo insurance and selecting specific policies, consider the total value of the assets to be transported. A rough estimate is undoubtedly an inadequate number. The company will either not have enough coverage or pay for too much.
It’s also important to consider the risks the items will face in transit and the objectives for protecting them. This should be done with each shipment.
Cargo insurance tends to provide a significant amount of coverage—and peace of mind—for the money. The easy route is to assume the shipping company will take all the necessary precautions to protect the assets. Still, even the most experienced, skilled crews have no control over mishaps such as a vehicle colliding with the truck transporting the shipment.
Having adequate cargo insurance means you won’t be faced with explaining the cost of a damaged or destroyed asset to your boss and then trying to figure out how your company can cover the expense.