Marine Insurance and why your Shipments need it

by | Nov 6, 2018 | Freight Forwarder, Logistics

Vessel on fire marine insurance

Marine Insurance and why your Shipments need it

For homeowners and drivers alike, insurance is necessary to protect you and others. But when it comes to international trade, not all importers realize the importance of marine insurance. It protects you from damage, theft, or loss while in transit. In case you’ve never considered this before, here’s what you need to know.

The Importance of Insuring Ocean Freight

There is an inherent risk to every shipment. Cargo can be damaged, stolen, or lost and this could be detrimental to your business. Importers mistakenly believe that loss or damage to their shipment will be covered by the freight carrier, forwarder, or supplier, but this simply isn’t the case.

Marine cargo insurance safeguards you from financial liability. Billions of dollars’ worth of cargo is damaged or stolen every year, and insurance will mitigate your loss in the event of an incident.

Understanding All Risk Insurance, Common Exclusions and General Average

All Risk insurance is preferred because it offers broad coverage of damages and losses but it’s not always an option for high-risk shipments. Here are common exclusions:

  • Damage caused by poor packaging
  • Fees incurred because customs rejected the shipment
  • Payment or collection failure
  • Abandoned cargo
  • Hidden defects in goods

There are other occurrences that could arise which would require you to pay whether your cargo is affected or not. In the event that a ship suffers a major catastrophe, such as a fire, there is the principal of maritime law known as General Average. General Average takes the total loss and averages it out so all parties pay a proportional amount based on the total value of the cargo. Essentially, everyone shares the loss.

Your freight forwarder can further explain the benefits of cargo insurance, the dangers of forgoing it, common exclusions, and other measures you can take to protect yourself from loss. It could save you thousands in the long run if one of your shipments suffer loss or damage.

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