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There are several types of insurance that geared toward business owners. One type that isn’t discussed as often as many others — but is equally important — is cargo insurance.
Cargo insurance protects goods while they are in transit from one place to another. Whether you are a manufacturer that ships merchandise to retailers or your business sends products directly to customers, cargo insurance allows you to file a claim if your cargo lost or damaged while in transit. Like all types of insurance, though, it does come at a cost, and many business owners wonder whether it’s really worthwhile.
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We’ve put together this guide to help you better understand cargo insurance and whether you should invest in it for your business. Keep reading to learn more!
What Is Cargo Insurance?
All carriers required by law to carry a certain amount of insurance. Known as carrier liability, this type of insurance actually provides very little coverage for your freight. From vehicular accidents and natural disasters to criminal acts and more. There are a lot of ways cargo can get lost or damaged while in transit. And if it only protected by carrier liability. You could be out a lot if something goes wrong.
Cargo insurance picks up where carrier liability insurance leaves off. Helping shippers minimize their losses if their goods stolen, lost or damaged while in transit. The insurance typically provides coverage for the goods while they are in storage and while they delivered to the buyer.
Reasons Why You Should Invest in Cargo Insurance
You may be able to save a bit of money up front by skipping cargo insurance, but it could cost you in the long run. Here are just a few of the many reasons why you should invest in cargo insurance:
Protect Yourself from Financial Loss
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While most shipments reach their destinations safely. There is a lot that can — and sometimes does — go wrong along the way. Whether your goods destroyed in a plane crash, stolen by pirates that hijack a cargo ship.
Damaged by workers who accidentally drop a pallet or simply never reach their destination for unknown reasons. Having cargo insurances means that you will not have to cover the loss or damage. In most situations, you compensated after filing a claim with your insurance provider.
Pick Up Where Carrier Liability Insurance Leaves Off
While carriers required to carry a minimum amount of insurance. This liability insurance often doesn’t pay out. By law, carriers are not responsible for some of the most common causes of damage or loss such as those incurred as the result of natural disasters or general average.
Even if the liability insurance does cover your shipment. You will likely only recover pennies on the dollar from the carrier. Cargo insurance picks up where carrier liability insurance leaves off. And is much more likely to pay out if there is a problem with your shipment.
Types of Cargo Insurance
Cargo insurance is typically categorized as two types: either land cargo or marine cargo. Land cargo insurance provides coverage for shipments sent over land. It covers trucks and delivery vehicles and provides protection against theft, damages incurred in accidents and other related risks. It is most often used to protect domestic shipments and typically operates within the boundaries of a particular country.
Marine cargo insurance covers shipments sent by sea or air. The goods and the means of transportation covered from damage incurred due to improper cargo loading or unloading, piracy, weather-related problems and other related issues. This type of insurance mostly used for international transportation.
Should You Invest in Cargo Insurance?
Cargo insurance protects shipments sent by air, water, rail, roadway and courier. And it provides significantly more coverage than the carrier liability insurance that required by law. As such, it is extremely beneficial to business owners.
If you are having trouble deciding whether the investment is worthwhile for your business. Think about what would happen if an entire shipment of your products destroyed or went missing. Would you be able to afford to replace the shipment? How would it affect your bottom line?
For many businesses, losing a shipment or having one damaged could spell financial ruin. Investing in cargo insurance ensures that you protected in the event of the unthinkable happening.
How Cargo Insurance Is Sold?
In most situations, cargo insurance can purchased along with the shipping service and other related fees. Many carriers require shippers to purchase cargo insurance and include the cost in their rates. It may also offered as an optional service. If you interested in purchasing cargo insurance to protect your goods, talk to your carrier.
More Than Insurance: It’s Peace of Mind
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If you own a business and you ship goods to customers or retailers. It is wise to invest in cargo insurance. While you can take steps like using appropriate shipping materials and purchasing high-quality corrugated boxes to protect your merchandise. Accidents and disasters can and often do happen. Investing in cargo insurance means that you will be able to recover your losses. I your products damaged or go missing while in transit.