From businesses that engage in global trade to freight forwarding companies, cargo insurance programs are designed to help transportation service providers minimize their risk exposure at every level.
Who Needs Freight Insurance?
Clients engaged in trade and transportation often require coverage tailored to their industry niche. There are a few types of business that especially benefit from specialized cargo insurance programs.
1. Customs Brokers
In facilitating the shipment of goods over national borders, customs brokers must stay up-to-date on constantly changing international rules and regulations. In addition to errors and omissions coverage, brokers should look for insurers that offer reliable, automated platforms that streamline the entry clearance process while ensuring security and accuracy.
2. Businesses With Global Supply Chains
As global trade continues to expand, so do the coverage needs of manufacturers, distributors, importers and wholesalers. Smart cargo insurance programs should accurately evaluate the risk profile of trade partners as well as appropriate coverage for loss or physical damage of goods during transit.
3. Property Brokers and Freight Forwarders
Loss prevention and risk management are also important for entities that arrange transportation and storage on behalf of shippers. A strong plan should include protection at each stage of delivery, including distribution and warehousing.
An increasingly globalized marketplace and the rapid evolution of digital solutions have made it more important than ever that transportation businesses invest in a nimble, experienced insurance partner who knows the industry.
Once you have your liability coverage squared away, it is time to start thinking about cargo coverage. What are cargo insurance programs going to be right for you? Most likely the one that covers your unique risk exposures. Here are three of the most common coverages you may not be thinking about.
1. Pollution Liability
No one wants to think about spilling cargo, but it does happen from time to time. If you are transporting goods like gasoline or other hazardous material, you may want to consider pollution liability coverage.
2. Theft Coverage
As you may know, the phrase “something that fell off the back of a truck” does not refer to something that actually fell off the back of a truck. It refers to theft of goods. If there’s a chance the material you’re carrying will attract the wrong crowd, include theft coverage in your fleet’s cargo insurance programs.
3. Refrigeration Breakdown
Sometimes referred to as “reefer breakdown,” this coverage protects you if you are carrying goods that must remain refrigerated and the system breaks down. No one wants to accept a delivery of spoiled milk or moldy lunch meat.
This list represents only three of several specialized cargo insurance programs. Consider your individual situation and select the policy that’s right for you.
We totally get it: Running a business is not cheap and the budget can quickly become overrun with expenditures. Materials, equipment, facilities and staff are all necessary line items you need to produce and turn a profit. But what about cargo insurance programs? Can you get by without them or are they just as critical to your company’s success?
Lack of Insurance Can Sink Your Ship
It is best to answer this question with an example of a legal principle used when transports are performed by ocean carriers. If the vessel is damaged at sea or the call is made to jettison your goods in order to save the ship, you are partly responsible for sharing and covering the losses. Carriers are not obligated to cover losses that happen for reasons beyond their control.
You could lose hundreds of thousands of dollars in goods if you do not carry insurance. This amount of money far outweighs the price of a premium for any policy. The cost of cargo insurance programs varies from roughly $0.15 to $0.35 per $100 value of the shipment and most policies cover your goods throughout the entire supply chain.
Without insurance, you could end up financially shipwrecked. However, for a modest fee, you can focus on continuing to do business and stop worrying about the state of your goods as they make their way toward their destination.