Cargo insurance, sometimes known as freight or inland marine insurance, can be an important part of commercial driving practices. Cargo insurance is a specialized coverage that’s designed to cover the loss, damage, or theft of delivered goods belonging to a third party. Depending on your coverage, cargo insurance can help pay for damages from fire, collision, or bad road conditions. In this article, we’ll discuss different policies, what cargo insurance costs, and how it may help your business.
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Types of cargo insurance
Cargo insurance coverage can be usually defined by two categories. These are:
- Land cargo insurance: This type covers goods transported on land, typically by trucks and small utility vehicles. It can help pay for damages from accidents, poor road conditions, and theft.
- Marine cargo insurance: This coverage applies to goods transported by sea or by air. Marine cargo insurance can often cover damages from loading, weather conditions, and even piracy in high-risk areas.
Alongside these two categories, there’s also several levels of coverage that help cover specific risks. These options include:
- All risks coverage: This cargo coverage can be the most comprehensive insurance on the market. Depending on your policy, it can cover general merchandise risks like loss or damage from external causes.
- Named perils coverage: This can cover specific risks that may cause loss or damage to specific cargo identified in the policy. Risks can include fire, theft, collision, or natural disasters.
- Open cover: This insurance option can provide continuous coverage for a specified period of time, rather than a one-time shipment. Businesses that ship goods regularly may opt for open cover insurance to help cover ongoing transportation.
Coverage and exclusions
Cargo insurance generally covers risks like theft and collision, but many hazards are often excluded. These exclusions commonly are:
- Damages resulting from improper packing.
- Damages or losses from acts of God like natural disasters.
- Losses due to perishable goods.
- War and terrorism in certain regions.
- Unpaid goods, whether denied by a customer or failed payment by a seller.
Understanding what is covered and what is not is crucial for businesses to help them mitigate potential damages.
Who needs cargo insurance?
Cargo insurance can be essential for various stakeholders in the supply chain, including:
- Freight forwarders and shippers: Businesses that manage transportation need cargo insurance to help cover damage to their clients' cargo.
- Importers and exporters: Companies that move goods across borders face various risks. Cargo coverage can help mitigate these hazardous conditions.
- Manufacturers and retailers: Businesses that produce or sell products should consider cargo insurance to help avoid financial issues that may arise during shipping.
- Logistics companies: These firms coordinate transportation and storage, making cargo insurance vital to help cover potential liabilities.
Why is cargo insurance important?
Avoiding financial loss
The primary reason for obtaining cargo insurance is to help avoid financial setbacks during the transportation process. The cost of goods can be substantial, and if they are lost or damaged during transit, the monetary impact can be devastating for a business.
Mitigation of risks
Weather-related events and unforeseen accidents can happen unexpectedly. Cargo insurance is important to help cover these risks so businesses may be able to recover financially if their goods are affected.
Theft and piracy
Theft and piracy are real concerns in transportation, especially when delivering goods by water. Cargo insurance can help provide peace of mind as business losses may be recompensated after a piracy incident.
Peace of mind
Having cargo insurance can help businesses to focus on their core operations without constantly worrying about potential losses. This peace of mind is invaluable in today’s fast-paced commercial environment, where business owners and entrepreneurs are focused on more pressing matters like growth and profits.
How to choose the right cargo insurance
Choosing the right cargo insurance can be a daunting task. You can start the process by evaluating the specific needs of your company. Consider the type of goods you transport, their value, and the risks associated with your shipping routes. Understanding these factors can help you select the most appropriate coverage for your transportation methods.
When looking for business insurance, you’ll also want to look at coverage limits and options. Some policies may offer broader coverage, while others might focus on specific risks. Comparing different options can help you find the coverage that best suits your needs and budget.
Collaborating with a trusted insurance provider is crucial to help identify solid coverage options. They can help you look for a company that specializes in cargo insurance and has a strong reputation in the industry. A knowledgeable provider can aid you through the process and explain the necessary rules to adding this coverage.
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Get started with cargo insurance
If you’re ready to cover your business and cargo, you can contact Infinity Insurance Agency, Inc. to discuss your insurance coverage options. Our experienced and knowledgeable agents are here to help you navigate commercial auto insurance questions for your various transportation needs. Call IIA today at 1-855-478-3705 for a free, personalized quote!