Shippers are responsible for ensuring that goods travel safely between their origin points and their destinations. But what happens if something goes wrong along the way? Thousands of shipping containers transported by sea are lost every year. To protect your shipping company against risks like lost or damaged goods, you may wish to purchase freight insurance also know as Cargo Insurance. Keep reading to learn more about how to protect your assest while they are in transit.
FAQ
What is freight insurance?
Freight insurance covers goods or commodities that are lost or damaged when in transit from point A to point B. The purpose of this type of insurance is to protect the freight carrier from any liability for any losses incurred by the sender owing to a lost or damaged shipment. Freight insurance typically insures the total or partial value of the cargo and is clearly outlined in the policy wording.
Who needs freight insurance?
Freight insurance is not mandatory, which means your company is not legally required to purchase freight insurance. However, there are several reasons that you may benefit from purchasing it. For example, without freight insurance, you could be left to pay for the cost of damaged or lost goods. Depending on the goods in question, this could be extremely expensive. Also many companies rely upon the shipping companies insurance, but it typically only covers up to $2/lb and you are left trying to collect from the shipping company, which is typically a very slow and painful process rather then being paid out quickly and directly by your own insurance company.
Is there a difference between Cargo Insurance and Freight Insurance?
Cargo insurance and freight insurance are two terms often used interchangeably, but there are some key differences between the two. Both types of shipping insurance aim to protect goods that are being transported either domestically or internationally from loss or damage. Where they tend to be used differntly is in who they are designed to protect, with freight insurance protecting the carrier and cargo insurance protecting the sender.
Carrier Liability vs. Freight Insurance. What’s the Difference?
Carrier liability insurance, unlike freight insurance, is mandatory. Therefore, every shipment is covered by some form of carrier liability coverage (though the amount of coverage varies). Sometimes the amount of coverage is less than the value of the goods as coverage is determined by the weight of the items rather than their value. In contrast, freight insurance coverage is calculated based on the value of the goods being shipped, which means it is more likely to cover the entire value of the items. Another key difference between the two is the claims process. Carrier liability claims are much lengthier and more complex, and involve proving the carrier’s negligence, whereas freight insurance claims are typically paid within 30 days and the claimant is not required to prove the carrier’s negligence.
What Does freight insurance Cover?
When you purchase a freight insurance policy for your company, you can be protected against supply chain issues, Acts of God, and carrier negligence. Freight insurance is recommended for carriers of all types of good including, but not limite to fragile items, food, electronics, consumer goods and high-value goods.
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