Shipping cargo either across land, or overseas, comes with its own set of risks. Business owners should be responsible for making sure that all risks that come with the shipping process are covered. Freight Insurance, also known as Cargo Insurance, protects investments and covers any goods for loss, damage, or delay. Without this insurance, all cargo is handled, stored, and carried at the shipper’s, owner’s, and consignee’s risk.
It is the law that all carriers must have a minimum amount of insurance, called carrier liability. However, this provides extremely limited coverage, usually excluding vehicle accidents, natural disasters, and even acts of war – all things that could potentially damage your precious cargo. Freight Insurance protects these goods while they are being stored, while they are in transit, and until they have reached their final destination with the buyer.
What are the benefits of Freight Insurance?
Freight Insurance gives you coverage for the duration of your cargo’s journey, including protecting your shipment while it is on land but still on its way to the buyer. There are many benefits to this type of insurance. For example, if your shipment is lost at sea, basic carrier liability will not recompense you for your loss; the same applies for if your shipment is being transported with a container vessel that sinks. Equally, if the truck carrying your cargo across land gets involved in an accident, carrier liability will not cover your losses. Freight Insurance covers you and your business if the worst should happen during the shipment of your goods.
What are the types of Freight Insurance?
Much like Life or Health Insurance, Freight Insurance has many different options that come with their own set of limitations and coverages:
- Land Cargo Insurance covers your shipment as it is transported on land and provides additional protection against theft, damage from collision, and other similar risks. For business owners who transport their goods via trucks, this type of Freight Insurance is extremely popular. This is the same for those who transport their cargo using utility vehicles. However, this insurance is only domestic, so it will only apply within the confines of the United States.
- Marine Cargo Insurance covers shipments that travel via the sea and applies to both sea and air freight. Unlike Land Cargo Insurance, this type of insurance works on an international level, which means businesses are covered for shipping their goods outside the United States.
Marine insurance policies are also permanent or renewable, which means if you have a business that does not have regular shipments, you can opt for a renewable policy and just pay for one-time voyages. In general, these voyages are relatively inexpensive. However, if you have a business that uses overseas shipping frequently, it is well worth investing in a permanent marine insurance policy.
Overall, it is better to invest in tailor-made Freight Insurance, which can be customized to suit your company’s logistic needs. Instead of a one-size-fits-all insurance package, insurance policies like these will mean that your goods are covered from anything and everything that might happen during transit.
The Bottom Line
Having Freight Insurance guarantees that you are covered for anything that could happen to your goods during shipment. Since shipping comes with its own set of risks, business owners that regularly ship their goods should invest in this type of insurance to cover themselves in the worst-case scenario. You can opt for renewable or permanent Freight Insurance and assess whether your goods require this next level of protection.