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Cargo Insurance is an Insurance which provide coverage against all risks of physical loss or damage to freight during shipment from any external causes during shipping, weather of land, sea or in air. Cargo Insurance is also known us freight Insurance it covers transits carried out in water, air, road, rail, registered post parcel & courier. Cargo Insurance is Important in International trade of goods
Business are taking cargo Insurance to reducing import & export of goods, it covered all the damages as per the risk or floating policies of the Insurance. Freight is pay by Cargo; Prepaid freights are payable in advance at the risk of cargo owner who includes it in the value of the goods insured under a cargo policy. Freight payable only on delivery of the goods in the designation, is it at the risk of the ship. Duration of the risk of attaching from the time of goods leave the warehouse or another place of storage at the placement of policy.
Risk continues during the ordinary course of transit to terminate on delivery.
Cargo Insurance cover all of the losses or damage caused by war, civil war, revolution, rebellion, insurrection or or any hostile act, capture, riots, seizure, arrest, restraint detainment, general average and salvage charges, strikes, , etc.
All the Following are covered under the benefits of Cargo Insurance: –
- Damages due to the Inappropriate Packing.
- Customs rejection.
- Employee’s dishonesty.
- Damages due to Collision.
- Miscellaneous causes Recovered (Damages due to Heavy weather, Sinking, Derailment)
- Provide claims of Theft.
- Provide claims of Fire.
- Parties covered
- Property covered
- Amount Recoverable
Lots of Cargo Insurance policies by Transportation cargo by land, sea & in Air transportation.
Some common type of cargo Insurance which are as below:
- All Risk
- (FPA) Free of Particular Average
- Shipment by Shipment
All Risk Policy typically covers all physical loss or damage from external causes, with some exclusion. This policy should cover include collision with an external object, jettison, train derailment, truck overturning, Improperly stowage by ship, deliberate destruction.
Free of Particular also known as Named Peril Policy. The list of which is exactly covered under FPA policy, theft is not covered by FPA policy. FPA usually cover collisions, stranding, burning of goods, sinking of goods, train derailment, truck overturning, and some acts of God.
Shipment by Shipment insurance coverage who shipping your goods from one place to another. There is may be certain exclusions, including defects in transportation, criminal acts on the part of the vessel crew, acts of God, & acts of war.
- Open Cover Cargo Policies
- Specific Cargo Policies
- Contingency Insurance Policy
When any Insurance holder opt for the coverage against the various consignments, they try to open cover cargo policies get activated.
It has 2 segments, renewable policy, and permanent policy
The renewable policy is required for a particular value requiring renewal after policy expiration. Many of the single trip or voyages fall under this category.
Permanent policy can be drawn up for a decided time period permitting countless shipments in that period.
When a company approaches an insurance company or broker for insuring a particular consignment, then it can fall under the category of specific cargo policies. It’s also known as voyage policies because only shipments are covered under them.
Lots of certain cases where the customer is not the seller & they’re responsible for insuring the goods against loss or damage.
There are perils associated with it if goods get damaged during transit and customer refuses to accept them. If some few cases, some customers do not insure the goods and tend to avoid the liability.
Under such circumstances, affected sellers can seek rectification with the help of the legal system. It is very costly for them, they may lose the case. That’s why sellers are advised to with contingency insurance which has a very less premium rate. For testing & verification, sellers need not to tell about to their customer.