As a business owner, you’re always looking for ways to minimize your costs and protect your interests. When you’re shipping goods over water, marine cargo insurance is one way to do both. Here’s what you should know about this type of insurance.
What is marine cargo insurance?
Cargo insurance protects your goods in the event that they are lost or damaged while in transit to or from the U.S. and a foreign country. Marine cargo insurance specifically protects against physical loss or damage to goods shipped by sea.
All-risk insurance is the broadest type of coverage and will protect your goods against any type of loss or damage, with the exception of a few perils that are specifically excluded from the policy. Named Perils insurance, on the other hand, will only cover your goods for the specific perils that are named in the policy.
Marine Cargo Insurance covers goods that are being shipped by ocean, while Inland Cargo Insurance covers goods that are being shipped by any mode of transport other than the ocean (e.g., by truck, train, or plane).
How is the insurance premium calculated?
The premium for cargo insurance is based on a number of factors, including the type of goods being transported, the annual value of goods transported, and loss history.
Why should I purchase ocean cargo insurance?
Marine insurance is not compulsory by law. However, if you are engaging in international trade, most shippers and carriers will require you to have cargo insurance in place before they will agree to transport your goods.
If you’re an exporter who has not been paid for the goods at the time of shipment then insurance ensures risk management and loss control. If you are an importer who has paid for all or part of the goods prior to receiving them, then you want to prevent financial loss if the goods are lost or damaged during transit.
Additionally, you may be required to post a bond and/or cash deposit in order to obtain the release of your cargo. By purchasing insurance, your insurance company assumes the responsibility and can usually expedite the release of your cargo.
Lastly, your terms of sale may require you to provide ocean freight insurance to shield the customer from physical harm or harm, but non-compliance with the terms of your agreement can result in sales loss and litigation.
Ocean cargo insurance is therefore essential for anyone shipping goods by ocean, and there are a number of things to keep in mind when purchasing a policy. Here are some tips:
- Make sure you understand the terms and conditions of the policy and what is covered and excluded for cargo claims.
- Make sure you insure the full value of the goods being shipped
Additional coverages for ocean marine cargo insurance include:
- General Average and Salvage Charges: This coverage protects you against your share of losses incurred when a vessel is wrecked, stranded, or abandoned due to a covered peril, and the salvage operation incurs expenses that must be shared among all cargo owners on board.
- War Risks: This coverage protects against loss or damage to your cargo caused by war, civil war, rebellion, revolution, or insurrection.
- Piracy: This coverage protects against loss or damage to your cargo caused by piracy.
When shopping for ocean cargo insurance, it’s important to compare policies and prices from a number of different insurers in order to find the best coverage at the most competitive price.
Need business insurance? We’ve got you covered!
At Coughlin Insurance Services, we believe that our customers should be valued and taken care of. We aim to provide quality service and meet the needs of our clients by providing businesses, including those in the food industry, with the insurance they need to protect their assets. If you’re a business looking for insurance, don’t hesitate to reach out for a free insurance quote today!