Does Your International Trade Business Need Cargo Insurance?

Updated on May 25, 2023

The transportation of goods via ocean shipping is a vital facet of global commerce, affording businesses the ability to efficiently convey vast quantities of products to destinations around the world. Despite many advantages that ocean shipping offers, it is not without its inherent risks. From natural calamities to theft, and accidents in transit, the possibility of cargo loss or damage can result in profound financial liabilities for businesses. Hence, obtaining reliable sea freight insurance is imperative in mitigating the risks associated with ocean shipping. In this article, we shall expound upon the significance of cargo insurance for ocean shipping businesses, and elaborate on how Freightmango can assist you in safeguarding your cargo.
 

Cargo Insurance for Ocean Shipping: Mitigating Risks and Ensuring Business Continuity 

The concept of sea freight insurance is a form of insurance policy designed to provide coverage for any loss or damage that may be incurred during transit. It offers an essential financial safety net for businesses, guarding against the potential impact of unforeseen circumstances that could cause damage or loss to their cargo. The implications of cargo loss or damage are particularly potent in the domain of ocean freight shipping, where the vast distances traversed, exposure to harsh weather, and the potential for theft or mishandling pose significant risks.

Inadequate cargo insurance could leave businesses vulnerable to colossal financial losses in the event of unforeseen incidents during ocean freight shipping. The ramifications of such losses could be catastrophic, disrupting supply chains and causing long-lasting damage to an enterprise's reputation.

What is Cargo Insurance?

Insurance for sea freight is a type of insurance that covers the loss or damage of goods during transportation. It protects the shipper, the consignee, or the owner of the cargo from financial losses caused by events beyond their control. Sea freight insurance policies typically cover the value of the goods being transported, including any shipping and handling costs.

Why is Insurance for Sea Freight  Necessary for Ocean Freight Shipping?

Ocean shipping involves several risks that can cause loss or damage to cargo. These risks include rough weather conditions, piracy, accidents, theft, and damage caused by loading and unloading. Shipping containers can get lost or damaged during transit, leading to significant financial losses for businesses.

Cargo insurance is necessary for ocean shipping businesses because it provides protection against these risks. Without insurance, businesses are exposed to significant financial losses if their cargo is lost, damaged, or delayed during transit. With cargo insurance, businesses can have peace of mind knowing that they are protected against these risks.

What Does Cargo Insurance Cover?

Cargo insurance policies typically cover the following types of losses:

1. Physical loss or damage to cargo caused by external factors such as weather conditions, accidents, theft, or piracy.
2. Loss or damage caused by mishandling or improper packing of cargo.
3. Delayed delivery of cargo caused by external factors such as bad weather, port congestion, or vessel breakdown.
4. General average losses, which occur when cargo is intentionally sacrificed to prevent a greater loss to the vessel or other cargo.
5. Additional expenses incurred due to a covered loss, such as salvage costs, forwarding expenses, or storage charges.

How to Choose the Right Cargo Insurance Policy?

Choosing the right cargo insurance policy can be challenging, as there are several factors to consider that might also affect your ocean freight rates. Here are some tips to help you choose the right ocean freight services for your business :

Consider the type of cargo you are shipping: Different types of cargo have different risks associated with them. For example, hazardous materials require specialized handling and have a higher risk of damage or loss.

Determine the value of your cargo: The value of your cargo will determine the level of coverage you need. Make sure you have an accurate estimate of the value of your cargo to ensure that you have adequate coverage.

Consider the shipping route: Different shipping routes have different risks associated with them. For example, routes that pass through pirate-infested waters may require additional coverage.

Check the policy exclusions: Make sure you understand what is excluded from the policy. Some policies may exclude certain types of losses or have limits on coverage.
 

Protecting Your Ocean Shipping Business: The Importance of Cargo Insurance 

• The cost of cargo insurance can vary depending on several factors, including the type of cargo, the shipping route, and the level of coverage.
• There are two types of cargo insurance policies: all-risk and named perils. All-risk policies cover a wide range of risks, while named perils policies only cover specific risks that are listed in the policy.
• It's important to understand the deductible and limits of your cargo insurance policy. The deductible is the amount you need to pay out of pocket before the insurance kicks in, and the limit is the maximum amount that the insurance company will pay out in the event of a loss.
• Cargo insurance policies typically have exclusions, such as losses due to war, terrorism, or inherent vice (e.g., natural deterioration of perishable goods).
• It's important to properly document your cargo before it is shipped to ensure that you have evidence of its condition in case of a loss. This includes taking photographs, noting any damage or defects, and keeping a record of the cargo's value.
• Cargo insurance can be purchased through a freight forwarder or directly from an insurance company. Freightmango offers both options to its customers.
• In addition to cargo insurance, businesses may also want to consider marine insurance, which covers the vessel and its equipment. This can provide additional protection in case of a loss.
• It's important to review and update your cargo insurance policy regularly to ensure that it continues to meet your business's needs. This is especially important if you are shipping different types of cargo or using different shipping routes.

How Can Freightmango Help You with Cargo Insurance?

Freightmango is an online freight marketplace that connects businesses with reliable ocean freight services and shipping carriers worldwide. In addition to providing ocean freight rates and shipping services, Freightmango also offers cargo insurance to ensure that your cargo reaches its destination on time and in good condition.

Freightmango's cargo insurance policies are provided by leading insurance companies and cover a wide range of risks, including loss or damage to cargo, delay in transit, and general average losses. The policies are customizable, allowing businesses to choose the level of coverage that best meets their needs.

Our team of logistics experts can help businesses choose the right insurance policy for their cargo. They can provide guidance on the type of coverage needed based on the cargo's specification.