Cargo Insurance

Cargo insurance is a form of insurance used to protect against loss of or damage to goods while they are being transported.  A cargo insurance policy indemnifies sellers against damage to cargo while they are being transported by sea, air and land. Bad weather, rough handling by carriers, and other common hazards to cargo in transit make insurance an important element for the protection of exporters. The terms of the sale determine whether the exporter or the importer is responsible for arranging for transit insurance, and to determine which risks must be covered.  If the exporter is responsible for insurance, the exporter should either obtain its own policy, or alternatively to insure the cargo under a freight forwarder's policy for a fee. Exporters are advised to consult with international insurance carriers or freight forwarders for more information about these options.

If the buyer [the importer] is responsible for cargo or transit insurance coverage, the exporter should not assume (or even take the importer's word) that adequate insurance has been obtained. Should the importer neglect to obtain adequate coverage, damage to the cargo might result in a financial loss to the exporter.   Shipments by sea are covered by marine cargo insurance. Air shipments may also be covered by cargo insurance, or insurance may be purchased from the air carrier. Cargo insurance usually provides coverage against loss, damage, and in some cases for delay in transit.

Special note: Carrier liability is frequently limited by international agreements. Additionally, the coverage is substantially different from domestic coverage. Although importers and exporters can agree to different components, coverage is usually placed at 110 percent of the CIF (cost, insurance, freight) or CIP (carriage and insurance paid to) value.

Copyright 2010.  Michael C. Dennis.  All Rights Reserved