Businesses that move large quantities of stock long distances take a great deal of risk. Whether they move their cargo by land, sea or air there are never any concrete guarantees that it’ll arrive on time and unharmed. There are simply too many uncontrollable factors to consider, that is why it is essential that you always carry the right cargo insurance.
What exactly is cargo insurance?
Okay, cargo insurance covers any loss that might result from the loss or damage of your cargo while it is being transported. Typically this might occur as a result of extreme weather conditions, for example it is not unheard of for large containers full of valuable cargo to get swept overboard during a heavy storm.
Depending on your policy, cargo insurance might cover the invoice cost plus freight, as well as the profit that you expected to make from the cargo. Unlike most forms of insurance, it is possible to insure a single voyage and many businesses prefer to operate in this manner. The policy holder is insured from the time the cargo leaves the warehouse until it reaches the importer.
Due to the fact that the value of cargo often differs greatly from shipment to shipment it is not possible to have a cargo insurance policy per se that covers a series of deliveries. However exporters and insurance companies do sometimes come to agreements that reduce red tape and the time it takes to organize a policy. In these cases insurers agree to cover any shipment that falls under a set of agreed upon terms and conditions. These terms and conditions typically include the maximum value of cargo to be shipped, the nature of the cargo, etc.
The idea of cargo insurance is to remove the element of risk from a procedure that is inherently very risky. Considering that the value of cargo often runs into the millions of dollars, if you fail to ensure your cargo properly you might just find your next shipment is your last.