1. What is Cargo Insurance? 🤔

Cargo Insurance is a risk management tool designed for cargo owners, traders, freight forwarders and logistics companies. It provides protection for goods during transport. This is the most reasonable and safe way for companies to ensure that they are compensated for the exact value in an event of loss. Businesses that choose cargo insurance instead of keeping their fingers crossed for their shipments are aware of the many drivers in the transport chain. They are familiar with the many variable conditions and the likelihood that their cargo will be damaged or devalued by an external event. Does that mean they are negative, thinking that the worst could happen? Fortunately – no! Rather, it is market knowledge and realistic judgment. Statistically, very often something goes wrong with transports and losses occur due to unforeseen events.

The leading idea of ​​cargo insurance is to provide peace of mind when it comes to events during transport. The fact that you may have never had theft or damage to your cargo does not reduce your overall risk exposure. To understand why this view is incorrect, we need to look at how many problems there are annually with basic transport methods:

1.1 By sea – approximately 226 million containers are shipped each year [1] – reported losses, lost containers and cargo claims are the highest numbers ever, according to insurers, business analysts and brokers. In 2021 alone, about 54 large container vessels have been completely lost [2], and the exact number of partial damages and losses worldwide is quite difficult to determine.

1.2 By road – In 2021, about 65% of cargo thefts occurred from trucks [3] during transport from consignor to consignee.

1.3 By air and rail – these forms of transport are one of the safest, but there are still the same risks that threaten your cargo. The only difference is that statistically the percentage of events occurring is smaller.

2. Why do you need Cargo Insurance?📦

Cargo Insurance fully covers the material interest of your company, and you have control over what indicators you have insured. In case of damage, you or your broker / representative manage the development of the case. And you enjoy fast and correct payment of compensation.

Why is this important and beneficial for you?

Sometimes the transport chain is long. The contractual subcontracting goes through several freight forwarders and carriers until it reaches the actual carrier who performs the transport. This understandably leads to a reduction in control and communication. The possibility of something going wrong increases significantly.

Here are some of the main types of events where you can rely on cargo insurance:

•  theft of goods caused by inappropriate choice of parking by the carrier;

•  the entry of emigrants into the cargo space, which often leads to damage and decay of the goods;

•  the loss of entire containers and incidents of fires on ships are also incidents for which you will be able to benefit from full coverage;

•  the malicious actions of organized criminal groups and the diversion of cargo to another recipient and their   subsequent disappearance;

•  road accidents and weather changes can also be a reason to use your cargo insurance.

The main element through which cargo insurance has an advantage over other insurance coverages is the fact that it is a more comprehensive coverage. Unlike the carrier’s / forwarder’s liability insurance, cargo insurance is subject to significantly fewer limitations and exceptions. A common opinion is that if the forwarder / carrier is insured, then there is no need to worry about the owner of the goods. In fact, this is not the case at all, as liability insurance often does not cover the real value of the damage.

Depending on the mode of transport, specific international conventions and transport laws apply. According to these regulations, the liability of the carrier / forwarder is limited to the weight of the goods. It is also regulated that in certain circumstances and events, transport companies are not liable for damages. This in practice leads to a significant number of cases, which are justifiably rejected by transport companies. Many of the claims do not find an adequate solution. This leads to a waste of time and money for cargo owners who have not insured their goods. We have hundreds of similar examples from our practice. We will analyze them in future materials on the subject.

 

3. What coverage can the cargo insurance offer? 📙

Here we will focus on the most complete coverage for “all risks”, namely Institute Cargo Clauses A. What is specific about thiese types of conditions is that they cover all “risks” that may arise during transport. Insurance protection includes all known and common risks such as: loss, damage, theft, fire, traffic accident, impairment and others. Under these standard conditions, only the specifically mentioned risks are not covered. For example: losses and damages caused by insufficient and inappropriate packaging. Damages due to delay. War damage, radiation and intentional action or inaction of the insured. Normal leakage or weight loss.

 

4. Who can benefit from Cargo Insurance? ❓

Any company that is part of the transport chain and has ownership can protect its material interests by insuring the goods. This can be a manufacturer, exporter, importer, buyer or seller. Anyone who organizes any type of transport by forwarder, carrier or courier. The insurance may be taken out by the consignor, consignee or one of their transport agents. It depends on the terms of delivery of the commercial transaction between seller and buyer.

Due to the intensive development and consolidation of their services, many freight forwarders and carriers are actively offering value-added services to their customers. They can take out cargo insurance on behalf and at the expense of their customers. That is how their cargo is insured against all risks during transport. This is a significant advantage for cargo owners who receive all services in one place.

 

5. How are claims solved? How can you receive compensation?💰

This one of the main advantages of cargo insurance. In the standard case of a complaint to freight forwarders and carriers, the claimant must prove the existence of liability under the applicable law. As well as prove the amount of his damage. However, in the presence of concluded cargo insurance, the steps to solve are easier. Also the term for decision and payment of compensation by the insurer is many times shorter. With this type of coverage, it is not necessary to prove which party is responsible for the occurrence of the event during transport. However, the responsibility of the transport company to which the transport is entrusted should be formally engaged. This obligation of the insured is a requirement of the insurer in order to be able to recourse to the responsible party.

6. Why Cargofort? 🔶

With Cargofort you have experts in the field of transport insurance, logistics and international transport law. You will be able to rely on them to effectively solve your damages and cases.

Cargofort is aware that you value saved time which you can use to grow your business. That’s why we’ve created intuitive software for quick notifications and policy changes. Notices and documents for damage are submitted through our online platform. We take full control of the case until compensation is paid. This includes correspondence with your client, subcontractor, insurer and all other parties involved. On demand, you receive up-to-date information about the development of the case. There is no need to actively participate in its resolution. This way, you stay focused on growing your business while Cargofort’s specialists solve your claims.

Cargo Insurance is not just another insurance that you take out without being sure what it will be used for. It is a key tool for security and protection of your goods during transport. Cargo Insurance guarantees that no matter what happens, your material interest will be protected.

By concluding it through Cargofort, you get an instant access to a  transparent and trusted partnership, innovative technological solutions, fast and efficient support!

Cargo Insurance with Cargofort is the most direct way to peace of mind and comfort for your cargo!

 

 

Bibliography:

[1] As indicated by British International Freight Association, “CONTAINERS LOST AT SEA – 2020 UPDATE”, accessed at:  <https://www.bifa.org/news/articles/2020/jul/containers-lost-at-sea-2020-update>

[2] The Safety and Shipping Review from Allianz Global Corporate & Specialty (AGCS) https://www.agcs.allianz.com/news-and-insights/news/safety-shipping-review-2022.html

[3] TT Club TAPA EMEA and BSI Annual Cargo Theft Report https://www.ttclub.com/news-and-resources/publications/tt-bsi-cargo-theft-reports/bsi-and-tt-club-cargo-theft-report/