How You Can Get the Best Insurance for Your Goods with Freight Forwarders
0 October 09, 2017 0 Comments
Now that you have chosen a freight forwarder you can trust with handling your goods, it’s time to choose an insurance program that will cover your cargo. Different types of coverage options can vary between products, and there are a number of choices that will meet your needs.
If you are wondering why you need to bother with the additional expense of cargo insurance in the first place (especially if the previous shipments you encountered all arrived in good condition and on time), there are many good reasons for this.
Your cargo itself may be fragile, high in value, or perishable. When it comes to cargo shipping, there is no guarantee that every shipment arrives safely and in good condition at the destination point.
Factors for Damages and Loss
Should your goods be subjected to damages or loss, having a good cargo insurance exists to cover or compensate the loss of cargo by air or sea. The possible reasons for its loss or deterioration upon arrival include, but are not limited to, the following:
- Damage – If the carrier encounters bad weather on route to the destination, the cargo will most likely be subjected to potential damage.
- Jettison – In situations where the ship could be compromised, the captain would have to throw cargo overboard to maintain vessel buoyancy.
- Sinking – In the event of a ship sinking due to engine failure or bad weather, all cargo would be lost and cannot be salvaged.
- Fire – Hazardous cargo such as chemicals and fireworks are often only allowed to travel via international waters, which is why carriers store them on the deck.
- Theft/Piracy – Pirates will often ply international waters in search of loot that they can seize from unguarded cargo ships, which will result in losses for business owners.
- Political Factors – Tense political relations between countries, ongoing labor strikes, or acts of terrorism, could affect certain ports and/or delay shipments.
Types of Cargo Insurance
Both domestic and international transport have different types of cargo insurance, each depending on the type of freight chosen for the transfer of goods. They are as follows:
- Land Cargo Insurance – This type of insurance covers land transportations, such as trucks and utility vehicles, from aspects such as theft and collision. Land cargo insurance is largely domestic in nature, and operates only within Singapore’s boundaries.
- Marine Cargo Insurance – This type of insurance covers both aircraft and marine vessels, and this is what you will be most likely needing whether the shipping is domestic or international.
Many freight forwarding businesses offer viable insurance coverage packages in the event of damages or loss that result in the loss of sales. There are certain things you need to consider when opting for an insurance package, such as:
- Legal Liability – Should you choose to opt out of insuring your shipment, the goods are automatically placed under minimum legal liability in line with the transportation industry’s standard.
- Insurance of Goods Only – To ensure replacement in case of loss or damage, request insurance for the replacement value in line with the commercial invoice value.
- Insurance of Goods + Shipping Fees – Requesting insurance for the shipment’s CIF (Commercial Invoice value, Insurance Costs, and Freight) value covers replacement plus shipping costs. This is especially important if you need to replace or repair your cargo somewhere other than the destination point. However, these charges are not refundable if the damage/repair occurs at the final destination point.
- Under/Over Insurance – Assigning proper value for the goods is important to ensure proper compensation. While under-insurance means that the claim will only be paid to the percentage that the shipment was insured, over-insurance means not getting coverage for any additional repair or damage costs. This results in you overpaying your premium for less.
In Case of Damage/Loss
As with all insurance payments, your premium and shipping charges need to be settled in order for the coverage to be confirmed.
For damages noted on the bill of lading during the time of delivery, insurance claims should be submitted in full within the set number of days permitted by the insurance company provided by your freight forwarder.
The best way to find out about the full disclosure policy is to talk to your freight forwarder when discussing your insurance to keep you informed and updated about the terms and conditions of their insurance policy.