Cargo insurance pays the value of shipments, up to coverage limits, when shipments are lost or damaged. Certain companies that ship goods need cargo insurance, but those with infrequent shipments can get coverage for individual shipments. Small business owners typically insure cargo through the carrier. Some major shipping companies, such as FedEx, UPS, or the United States Postal Service (USPS), include estimated insurance fees of $2 per $100 of the insured value of the shipment.
If your business ships freight, whether it’s regular or not, you need to make sure those valuable assets are protected from unexpected damage or loss. To make getting coverage simple, contact CyberPolicy, a trusted insurance broker who will shop and compare policies from the top carriers to get you the right coverage fast.
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what is freight & cargo insurance?
freight insurance covers shipped goods when transported by land, sea or air. pays the value of lost or damaged shipments up to the coverage limits, less the deductible. Policies can be purchased by the seller, the buyer, or even the shipping company. Generally, the party with the largest financial investment obtains freight insurance coverage.
Cargo insurance is a type of property coverage also called marine insurance. There are two main types of maritime coverage: oceanic maritime, for shipments by sea, and inland maritime insurance, for shipments by land. Some cargo insurance coverage includes all modes of transportation. Import/export companies, wholesalers, distributors, and manufacturers are most likely to need cargo insurance through a carrier.
Truckers who transport food, medicine and other items on a daily basis need freight and cargo insurance to protect against unexpected loss or damage that occurs during shipping.
how the freight & cargo insurance works
While carriers are responsible for damage to your shipment, they generally only have to pay the amount of your loss. With this, courts often subtract the market value of the damaged property from the market value it would have had had it arrived unharmed. additionally, carriers are not responsible for associated costs, such as lost revenue.
To calculate freight and cargo insurance costs, you must take into account the following:
- overall responsibility
- load rating
- load type
- loss history
- natural disaster
- vehicle accidents
- acts of war
- load abandonment
- customs refusal
Under federal law, trucking companies are responsible for damaged cargo, unless the damage was caused by an act of god, such as lightning or hurricanes, government action, thieves, or product failure. however, the courts award shippers the market value of their cargo as it should have arrived minus the market value in its actual condition.
what freight & cargo insurance coverage
Federal law requires trucking companies to carry some carrier liability insurance, but the minimum requirement may not be enough protection for your shipment. Also, other carriers do not have the same requirement. that’s why agents often recommend additional cargo insurance. generally covers external causes of loss and damage to your shipment.
Common triggers for cargo insurance include:
When a covered event causes damage to your shipment, cargo insurance pays up to the amount you insured it for, less your deductible.
It is best to find an insurance agent or provider who has experience dealing with cargo insurance, as they will be able to address the following:
- responsibility for insuring the goods: whether the buyer or the seller will insure the goods
- point of transfer of title to goods: at what point the goods will be transferred from the seller to the buyer; may depend on the type of goods and the time it takes to ship them
- insurance terms: the insurance terms as defined in your respective insurance policies
- location of insurance company: important if it is a us company. uu. the importer asks the seller to provide insurance, as the insurer may be located abroad, which could complicate claims processing
what freight & cargo insurance does not cover
Cargo insurance has some important limitations. for example, it does not cover carrier liability. As a shipper, you do not need liability coverage. The carrier is responsible for ensuring that your shipment reaches its destination. but if you are the carrier responsible for transporting goods, then you need carrier liability insurance.
In addition, freight and cargo insurance policies have exclusions. these are policy provisions that eliminate coverage for certain risks.
Individual transportation insurance policies typically exclude:
- Damage from improper packaging: If water leaks and corrodes your shipment, the responsibility for the damage is yours.
- Damage caused by defective products: If the carrier can prove that your product has a defect that caused the damage, then it is not responsible for it.
- Certain types of cargo: Hazardous materials, certain electronics, or other types of cargo may be excluded, depending on your insurer.
- certain modes of transportation: some cargo insurance may exclude trucking. other insurance may exclude cargo ships, freight trains, or airplanes.
- inadequate packaging
- load abandonment
- rejection of goods by customs
- employee dishonesty
- loss due to the nature of the product
- lag loss
- mistakes in ship management
- cauldron bursts
- hull or machinery defects
- inherently hazardous: materials that are flammable, corrosive or explosive
- valuable: products such as large machinery or important electronics
- perishables: items such as food or certain pharmaceuticals
- easily stolen: small or attractive items, such as smartphones, car parts, or luxury items
- maritime/air traffic insurance
- master controlled program with locally written underlying policies that are required and permitted by law
- multiline coverage
- carriers interest charge
- responsibilities of the depositary
The insurance industry does not have a standard cargo insurance form, so exclusions and inclusions vary widely. Business owners who ship a lot and are looking for a separate policy should probably work with an agent or attorney to make sure their cargo insurance meets their needs.
freight & types of cargo insurance coverage
Depending on your business, you can ship your products domestically, internationally, or both. you can use trains, trucks, cargo ships, planes, or a combination of all of these. As a result, cargo insurance has many variations, including the following:
land cargo insurance
This is cargo insurance coverage for ground shipments, most often via trucks and small utility vehicles. This coverage is often limited to vehicle accidents, but can also pay for theft and other damages. You want to ask if your policy includes theft coverage if your shipment needs to be stored on a truck overnight.
Land cargo insurance only applies within the limits of a given country. coverage is only for domestic transportation. If your shipments cross national borders, you may need additional coverage.
maritime cargo insurance
Most ocean freight insurance covers ocean and air shipments, but some policies also cover ground transportation. normally pays for damage caused by bad weather, loading and unloading, piracy and other related risks.
Marine cargo insurance is not limited to a single nation. this makes it suitable coverage for international shippers.
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Business owners who ship goods regularly may want to obtain open coverage cargo insurance, a type of marine insurance that covers multiple shipments made over the life of the policy. the policyholder periodically reports a group of shipments to the insurer, and these reported shipments are covered.
The policyholder must also provide the insurer with details about their business, such as the type of goods being shipped and their destination. failure to provide this information may void the policy.
Also called a travel policy, individual coverage is the opposite of open coverage. It is a marine policy that insures single shipments and is more suitable for low volume or infrequent shipments. this policy makes more sense for small businesses that ship products on a regular basis.
all risk cargo insurance
Comprehensive cargo insurance offers the broadest coverage for shipments. insures your shipment against external causes of damage, except those described in the policy. In addition, it covers damage caused by any event that is not specifically excluded in the policy.
Some common exclusions in comprehensive cargo insurance coverage are:
With comprehensive coverage, your insurer pays unless your loss is the result of one of the perils listed on your policy.
free of particular medium coverage
free coverage of particular average (fpa) is a clause that frees your insurer from covering losses in most situations. generally, it covers events that are outside of a person’s control.
for example, the average coverage free of private individuals for marine insurance usually pays the total losses derived from:
This is sometimes called a total loss only policy because it only charges if you suffer a total loss.
overall average coverage
When you transport goods by sea, you share responsibility for the ship and all its cargo with the owner and other cargo owners. Essentially, if someone else’s ship or cargo is damaged to save the ship, you share that loss with everyone else involved.
can be responsible for a general average if the captain needs to abandon cargo after the ship runs aground or is caught in a storm. sometimes the owner of the ship does not even release the cargo from him until he has paid his share of it. with general average coverage, part of it is paid by the insurer.
Most marine cargo insurance includes a warehouse-to-warehouse clause. Insures your shipment from the time it leaves the seller’s warehouse until it reaches the destination warehouse. without it, your cargo is only protected when it’s on board the cargo ship.
warehouse-to-warehouse coverage may not be in effect in some situations. for example, it does not cover cargo if it is picked up by the shipper or consignee. your coverage may also be affected by the terms of sale (for example, if the buyer assumes ownership before the cargo reaches the final destination warehouse).
contingency cargo insurance
Contingency freight is a type of freight broker insurance. brokers and shippers buy contingent cargo policies because they can cover claims brought by business owners who use their service. covers common causes of loss, such as theft and damage in transit. however, contingency cargo insurance is only activated if the shipping company refuses to pay a claim.
Here’s how it works: Let’s say you use a freight forwarder to ship items overseas and the items are damaged in transit. The shipping company denies your claim, so you turn to your broker for reimbursement. if they have contingent cargo insurance, they may be able to cover your costs.
cyberpolicy experts will take all of your insurance requirements into account when working with the best insurers to provide you with comprehensive coverage. tell the cyber policy experts about any specific risks and they’ll do the legwork to find the right policy for you.
freight & cargo insurance costs
Cargo insurance costs are typically a percentage of the value of the shipment or the value of the shipment plus shipping charges. most freight forwarders sell coverage for 60% of the value of the shipment. for every $100 of cargo, there is a corresponding insurance value of up to $2.
freight and transportation cargo insurance coverage single shipment costs
many providers have minimum premium requirements on independent cargo insurance. that’s the amount you have to pay no matter what, and it’s one of the reasons small business owners who rarely ship items or who ship small amounts get cargo insurance through the carrier, the broker or the carrier.
chart shows insurance rates for a single shipment from los angeles to new york. Each shipment contains 20 computer cases weighing 100 pounds each and having a retail value of $10,000. As you can see, shipping costs have a minor impact on the premium. however, other factors may come into play.
Other factors that affect freight insurance costs include:
articles that are sent
The type of goods you ship can have a big impact on your cargo insurance costs. Shipping products that are inherently risky, valuable, perishable, or easy to steal typically increase cargo insurance costs.
here are some examples:
your loss history
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Insurance applications almost always include questions about past losses. insurers use that information to determine how risky it is to insure your business. compare your losses with similar businesses and increase your premium to cover the cost of potential claims.
Most cargo insurance providers only consider transportation-related losses, but some may consider other claims to determine your risk. this makes good risk management (such as proper packaging) important because it can reduce the likelihood of claims.
subscribers consider some routes to be riskier than others. sometimes this is due to geography. routes through mountainous, icy, remote, or treacherous areas may increase your rates. Your rates may also increase if your shipment has to pass through areas known for piracy or theft. political instability in the country of origin or final destination can also increase the risk and its premium.
where to get freight & cargo insurance
cyberpolicy simplifies the process of buying insurance online. They are a trusted broker that searches and compares quotes from major carriers including Progressives, Chubb, Liberty Mutual, Nationwide and over 40 more. This ensures that you get the right coverage for your business at an affordable price.
No matter what type of business you own and how often your business ships cargo, cyber policy will help ensure your assets are protected. cyberpolicy strives to offer fast and accurate rates from major insurers and simplify the process of obtaining transportation and cargo insurance you can trust.
As a broker, coverwallet works with a host of national carriers so you can be sure your products are covered on your journey from start to finish. connects small business owners with insurance experts who help determine what type of coverage is needed and why.
Unlike many providers, rates are easily viewed on the coverwallet website. also offers an online service where you can request a free, no-obligation quote and explore options. if you get stuck, you can always call to speak to a helpful representative for help.
Travellers is a well-known insurance company that offers industry-specific claims, risk management and underwriting services for small businesses. business owners work directly with agents to quote, bind, and service their policies.
The Travelers Ocean Maritime Policy, called Elite Cargo, is designed for importers, exporters, manufacturers and freight forwarders to ship goods by sea. It is an all-risk policy, which means that it covers any risks except those specifically described in the policy.
travellers also has an ocean freight policy called cargo elite express that is offered to companies with annual international shipments worth up to $20 million. Like cargo elite, cargo elite express offers coverage against all risks and fixed annual premiums.
roanoke trade specializes in securing businesses that import, export and transport goods. have been focused on the transportation and logistics industry since 1935, offering innovative insurance policies, bonds and cards as a subsidiary of the leading insurer Munich re.
Because Roanoke Trade has a wealth of experience in the industry, they can write cargo insurance policies for ocean, road, air, land, and rail transportation. Plus, they can customize them for many unique situations, including high-value cargo, warehousing, and international shipping.
roanoke commercial policy owners can process their marine cargo claims immediately through the coverage.
chubb is a large, publicly traded insurance provider with operations in 54 countries and affiliate relationships in more than 190 countries. That global reach gives Chubb an advantage in writing cargo insurance coverage for international shipments.
chubb offers coverage and services for small businesses planning to expand into the global market. Among the coverages that entrepreneurs can obtain through chubb are the following:
chubb offers a minimum premium of $1500 and its limits can go up to $60 million.
cargocover is an industry leading cargo insurance broker. The company offers cargo insurance policies underwritten by quality insurers, including CNA and Freedom Mutual. In addition to cargo insurance coverage, small business owners can purchase commercial property liability, crime, and motor truck cargo policies.
what makes cargocover unique is your online experience. It starts with a simple online application that generates quotes. policies can be booked and managed online. plus, they offer downloadable certificates of insurance that business owners can securely print or email.
cargocover also offers transportation insurance for freight forwarders (nvocc), third party logistics providers (3pls), common carriers (ocean and truck), and freight forwarders.
Business owners who ship only occasionally or who ship small quantities of products can usually get the best deal on cargo insurance by working with their freight forwarder. however, manufacturers, wholesalers, importers and exporters may need their own cargo insurance to be fully protected.
The more ships your company ships, the more likely you will need cargo insurance. Talk to a cyberpolicy expert about your specific risks, and they’ll search and compare your exact needs to find you the right coverage at an affordable price.
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