Why is cargo insurance so important? You could be asked to pay millions for a sunken cargo ship even if you are only shipping a few thousand dollars in goods, according to a recent Entrepreneur Magazine article.
The article, "Does Your Business Need Cargo Insurance" by Carol Tice, told the story of a small shipper who used a cargo ship that was struck by rebel shelling in Beirut’s harbor in the 1980s.A few weeks later the shipper received a bill for millions - his company’s portion of the ship’s replacement cost.
If a cargo ship transporting goods is damaged at sea or cargo must be jettisoned to save the ship, all the ship’s customers share in covering the losses according to provision known as the “general average “clause.
According to the Mid-Atlantic Shippers Association, on average a cargo ship sinks every day and 30% of losses in transit are considered unavoidable.
Another reason Cargo insurance is important for business is the growing problem of cargo theft, which causes up to $30 billion in yearly losses for companies in the United States, according to the Federal Bureau of Investigation.
Types of Cargo Insurance include:
• Ocean/Marine Cargo Insurance is used by those who ship cargo internationally, including importers and exporters, logistics providers, ocean cargo carriers, manufacturers, distributors, wholesalers and retailers.
• Inland Marine Cargo Insurance is insurance for “property in transit over land, certain types of moveable property, instrumentalities of transportation (such as bridges, roads, and piers) instrumentalities of communication (such as television and radio towers), and legal liability exposures of bailees,” according to the International Risk Management Institute.
• Domestic Transport Cargo Insurance covers cargo shipments within the country of origin.
• Import/Export Cargo Insurance can be used by distributors, wholesalers and freight forwarders. Import/Export Cargo insurance can allow your insurance company to expedite release of cargo in the event of a “General Average” and can also help meet contractual requirements to protect a buyer or bank’s interest.
Cargo insurance often involves complex issues of international law and insurance. Contact Golden Global Insurance at 305-899-5125 to develop an insurance plan that meets your needs to control both risks and costs.