Freight insurance is often overlooked but skipping it is a gamble that could cost you a lot.Whether you’ve been importing for years or you’re just starting to get your feet wet in terms of logistics, it’s very important to understand freight insurance. Let’s break it down.
What Is Freight Insurance?
Freight insurance is a type of policy that protects your goods from loss, damage, or theft during transit. This is separate from carrier liability, which can have limited coverage and requires proof of fault on the part of the carrier. Forget who’s at fault, with freight insurance you’re covered so you can rest easy knowing your shipments are protected.
No Cargo is Safe Without Freight Insurance
The Carrier’s Liability Is Not Sufficient
Carrier liability, however, often only covers a small amount of the goods value, a common misconception among shippers. Carrier liability is limited in reality and may not be the full cost of your cargo. It typically pays off weighing rather than valuing and excludes many routine risks. cite,turn0search1
Guard Against Common Risks
Cargo insurance is a property insurance that covers loss or damage to goods
Accidents
Theft
Natural disasters
Improper handling
All of these come with the potential for major financial loss with no insurance coverage.
Simplified Claims Process
Freight insurance claims are typically much more simple than carrier liability claims, which only pays if negligence can be proved. All you need to prove is that the loss or damage happened while in transit. cite,turn0search0
Types of Freight Insurance
All-Risk Coverage
Unless otherwise excluded, all physical loss or damage from external causes is insured under this all-risk policy. It is particularly appropriate for high-value or fragile goods.
Named Perils Coverage
It is limited to risks explicitly covered (e.g. fire, collision, theft). It’s more restricted however can be cost-effective for certain shipments.
Shipper’s Interest Insurance
Available as an optional add-on at time of booking, this insurance covers just about every-on of damage to freight for just about any reason. It doesn’t require the shipper to prove that the carrier caused the problem, only that the damage or loss happened in transit. ‚cite,turn0search
When Is Freight Insurance Mandatory?
If you’re shipping, consider freight insurance
High-value items
Fragile goods
Used equipment
Goods to high-risk areas
Finally, if you can afford the potential loss, insurance is a smart buy.
How to select the right freight insurance
Assess Your Risk
Assess the value of your goods, route and potential threats. This will help in determining what coverage you actually need.
Compare Policies
Not all freight insurance is the same. Shop around with other providers for coverage options, exclusions, and premiums.
Understand the Fine Print
Carefully read the details of the policy. Know what’s excluded, claims processes and documentation needed.
What are some common exclusions in freight insurance?
Though freight insurance covers a wide berth of risks, there are some common exclusions:
Inherent vice (natural deterioration)
Improper packaging
Delays
War or nuclear events
Check your policy for specific exclusions whenever possible.
Cost of Freight Insurance
Freight insurance cost is dependent on:
Value of goods
Type of goods
Shipping route
Coverage level
Generally, premiums vary from 0.1% to 2% of the cargo value.
How To File a Freight Insurance Claim
In the unfortunate event of loss or damage:
Take pictures of the damage, and document it.
Contact the carrier and insurer, right away.
Submit all necessary documentation such as the bill of lading and invoice.
File the claim within a timely manner.
Fast action can speed up claims process.
Final Thoughts
Freight insurance is not an unnecessary expense, but rather a protection for your company. And by knowing the options available to you and selecting the appropriate coverage, you can best safeguard both your products and your bottom line.
Read more like this at The American Truck.INC and discover new insights of shipping and logistics. com.
For an in-depth look at freight insurance policies, check out this complete guide by Freightos. link,turn0search1