Like it or not, whether you’re shipping by land, sea or air, there’s always a possibility that your cargo will be damaged along the way.
There’s no way of completely guaranteeing safe cargo. You can’t control natural disasters, weather anomalies, human error, or, if you’re unlucky, dishonest shippers. Just a handful of problems could cause a major financial impact — from thousands of dollars to millions for the larger shippers in the industry.
When shipments are lost, stolen, damaged, or worse, irreparably ruined, your business can run into serious problems. Luckily, there are steps you can take to ensure you control your losses if it should happen.
What is cargo insurance?
First and foremost, there are things that a shipper can do in order to safeguard their cargo. These small steps can go a long way in ensuring your goods will reach their destination without any hiccups or damages:
- Secure all of your goods, i.e. make sure they are neatly packed.
- Always take a thorough look at your inventory and of goods being shipped.
- Consider purchasing an insurance policy.
The last point is important, because while doing it on your own can save you money, that isn’t necessarily the best practice. You can triple check your inventory and personally secure all of your shipments, but issues can, and will likely, arise.
Cargo insurance, at its most basic form, is a policy that protects your goods from physical loss or damage during transit. That means if your cargo doesn’t arrive safely to its destination, you’re taking precautions and the insurance will provide compensation so you can replace the lost or damaged goods.
Of course, cost and coverage will vary from package to package, and also varies depending if you want to insure land cargo transport, sea and air cargo transport, or a combination of two.
Why do I want cargo insurance?
Cargo insurance will save you money in the long run. Cargo damage is an almost unavoidable phenomenon eventually, so why take the chance?
Here are few examples of insurance package types typically available:
All risk coverage insurance: The name says it all. With this type of insurance, you should expect to be protected in most facets of the shipping process — though there are always some exemptions. This coverage usually insures:
- Damage caused by poor packing methods
- Lost or forgotten cargo
- Customs delays or rejection
Average coverage: In these cases, prior to shipping, the shipper usually decides how much the insurance will cover. It will only come into effect if there are serious financial losses to the cargo. This coverage is more suited to sea shipments, and usually covers a specified number of unforeseen issues, such as:
- Unpredictable weather
Ready to purchase cargo insurance? Hire a customs broker.
Taking care of the insurance package of your cargo might seem easy enough, but there are certain nuances only a customs broker will know. Their knowledge of cross-border shipping and government policies on trading will help you discover the most efficient and affordable package.
A customs broker can also help you in the process of understanding cargo insurance. You might feel knowledgeable and comfortable dealing with insurance companies, but ultimately the broker will be far more suited in handling these discussions while keeping in communication with you as you decide on what kind of coverage you’d like for your shipments.