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It’s a common practice to insure against risks associated with transporting cargo especially if the carrier is responsible for international cargo transportation. Any party of the supply chain having any kind of valuable interest in the cargo can act as an Insurer under the insurance policy. Cargo owners; either buyers or sellers benefit from insurance by securing themselves against financial losses due to property damage. For third party such as a forwarding agent or carrier, this extends beyond regular property damage insurance by safeguarding against recourse from the insurance companies in the case of the insured event as well. Most often insurance costs are included in the price of the third party’s services.
There are two main options available for insuring international shipping (air cargo, marine cargo or cargo delivered by truck, for instance). There are generally separate insurance policies for each and every shipment or alternatively a master agreement covering every shipment carried out during the term of the agreement.
A number of factors are taken into consideration by insurance companies when quoting single shipment insurance. They are transportation route, type of transport used (cargo plane or cargo airlines, trucks, ship, railroad transport etc,), dates and term of shipment, transported goods specification, packaging, weight, quantity and shipment’s value.
For master agreements another collection of variables come forward. These include: expected annual cargo turnover, possible transportation routes, along with minimal, maximal and average shipment value. This kind of policy is most suitable for those Insured who conduct dozens of shipments a year as it usually covers a great number of countries and modes of transportation (cargo plane, truck, train etc.). As a general rule, all shipments within the value limit that both parties agreed on fall within the coverage. Reconciliation statements are usually signed on a monthly basis showing the factual number of shipments delivered, for example, truck cargo or air cargo to certain countries. The insurance premium is adjusted subsequently.
The sum insured for internal shipments usually equals the full cargo value, sometimes being increased by transportation expenses. As to international shipments, the insured sum consists of cargo value, freight, customs duties and cross-border fees. It sometimes even includes taxes and excise levy. The standard sum insured for such shipments is set in the amount equal to 110 % of the shipment’s value.
Finally, it’s always reasonable to cover the damages during loading or unloading operations as well as intermediate warehousing irrespective of the chosen insurance program or the type of shipment (truck delivery or air cargo, etc.).