Shipping Cost: Marine Cargo Insurance

Posted by Port City Logistics on Apr 26, 2019 3:20:31 PM

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Almost all companies who pay to ship goods obtain cargo insurance to help protect their freight against unexpected accidents and damage. Marine cargo insurance covers items transported over the ocean by ship or aircraft. Let's look at some of the most important advantages provided by marine cargo insurance.

Marine Shipping And Cargo Risks

For thousands of years merchants have relied upon oceangoing vessels to convey products from one place to another. While the safety of merchant fleets has improved significantly during recent decades, of course, accidents still sometimes occur at sea. Even modern container shipments may sustain freight damage during transit. Hurricanes, piracy, fires, and rough waves all sometimes produce devastating commercial losses.

Logistics companies widely urge their customers to consider purchasing marine cargo insurance. Why? Even though most carriers do maintain required insurance policies covering freight, most of these policies furnish only minimal protections based upon the weight of the cargo.

Why Marine Cargo Insurance Matters

In the absence of marine cargo insurance, a single maritime disaster during transit has the potential to bankrupt smaller businesses. A per-pound reimbursement system doesn't offer much assistance to a distributor who invests tens of thousands of dollars in inventory purchased from a distant manufacturing plant. Lightweight goods such as electronic gadgets, jewelry, and other consumer items often cost far more to buy wholesale than the owner could ever expect to receive under a weight-based compensation formula following a total loss.

Merchants have an opportunity to offset these risks. They gain expanded protection by purchasing their own marine cargo insurance policies to compensate them for actual cargo or freight damage. The provisions of the individual insurance contract may vary, but typically these types of policies help compensate an insured for actual losses which occur at sea. Just as comprehensive auto insurance safeguards vehicle owners more effectively against unexpected damage than standard auto liability insurance alone, marine cargo insurance represents a valuable adjunct to the shipping insurance offered by most cargo carriers.

Customized Marine Cargo Insurance Policies

Merchants seeking marine cargo insurance policies should shop carefully for this product. Comparing and evaluating available policies often helps customers save money during the course of purchasing comprehensive marine cargo insurance. The terms of a specific insurance contract prove vitally important in determining the extent of compensation if a loss occurs.

Insurance experts describe three specific types of available marine cargo insurance policies: "open cargo", "specific cargo", and "contingency". A merchant should consider discussing these different types of policies with the firm's attorneys and insurance agents to determine the best option for the company's unique circumstances. Some policies will cover all company cargo shipments on a recurring, ongoing basis, while others pertain only to single, specific shipments or voyages. Sources for obtaining marine cargo insurance include both freight forwarders (who usually do not charge a deductible) and insurance agents and brokers.

Contact us for complete information about maritime insurance, and our other services like long and short term storage, distribution networks, and regional freight shipping. Let Port City Logistics earn your business!

Topics: The Costs of Shipping