Undeniably, the hassle of shipping products from one place to another is next to none. There is a ton of paperwork to document, deal with customs regulations, and track orders during the entire process. Above all, there are financials and high-risk damage at stake to protect the company against losses. After all, when the freight is in transit, it is prone to the risk of several contingencies. For example, the shipment might get lost in the sea if the container ship sank. Although these containers have carrier liability, it doesn’t cover the value of full freight. Therefore, many businesses are turning to cargo insurance to mitigate this risk. It provides substantial coverage, preventing losses that might occur if the cargo gets lost or damaged. In addition, cargo insurance offers contingency policies and a diverse range of options to facilitate business owners in the best possible way. If you are uncertain about this decision, have a look below. Here are five reasons why businesses opt for cargo insurance in 2021.
1. Flexible Insurance Rates
The only reason why businesses hesitate insurance is that it brings an additional expense to the company. In some cases, it might be accurate. But cargo insurance offers the most flexible rates to ensure business owners don’t feel overburdened. The insurance companies look at the business model and products to determine the rate. However, to get the best rate, look for cargo insurance providers within your region. For example, you can look up cargo insurance Los Angeles CA to find reputable cargo insurance companies in LA, California. You can even ask the providers which items go into the calculation of insurance rates.
Usually, providers consider the nature of items you are shipping. If products are fragile or export kitchenware, the insurance rate will be higher since the likelihood of damage is high. Moreover, they look at the owner’s policy limits; meaning, how much one can pay. And lastly, they determine the owner’s prior insurance loss history. If you have a clear track record, the insurance agent will provide you a lower rate with the necessary level of coverage.
2. Different Range of Coverages
Do you ship internationally? Well, cargo insurance is available for both imports and exports. Hence, you can get coverage for shipping to another country and minimize the risk of losses. If the standard cargo coverage doesn’t seem enough, entrepreneurs can stretch international coverage. Have a look below.
- Marine Insurance: Protects the transportation efforts of goods carried by sea. It protects companies against loading/unloading damages, weather contingencies, loss, and in-transport damage. Above all, they also compensate for theft and piracy.
- Land Cargo Insurance: It covers the aspects of vehicles and trucks that travel by land. It protects companies against accidents, damage, and associated risk of logistics.
- Specific Cargo Policies: Sometimes, companies have to ship small amounts of goods. For this, specific cargo policies work the best. It has defined limitations and provides maximum coverage.
3. No Deductibles
Nowadays, many insurance providers are offering policies that protect up to 100% of the loss amount. It means if the cargo suffers any damage, the company won’t have to pay any deductible corresponding to the value of its shipment. Instead, the insurance company will protect 100% of the loss, ensuring the company doesn’t incur additional costs. Such policies are super helpful for manufacturers whose shipment often gets affected. Additionally, these no-deductible policies give people peace of mind, knowing that their valuable goods have sufficient coverage.
4. Protects Against Losses
When it comes to the shipment of products and services, we are talking about millions of dollars. Even a single container may have more than 1000 products, costing thousands of dollars. Now, imagine putting all this money at stake. If you consider cargo movement by road, the road gradient and gravitational force can cause the sliding of the cargo. Similarly, suppose you are getting shipment by sea. In that case, the heavy surge and waves can cause different stress on the load packed inside the container.
Fortunately, you can eliminate these worries by getting cargo insurance. It pays for the entire amount of damage that happens to the shipment. It also covers natural disasters, vehicle accidents, custom rejections, and cargo abandonment. In short, it saves the company from financial losses that can occur from shipment damages.
5. Warehouse Coverage
Sometimes, the shipment reaches safely to the destination, but warehousing can also lead to damages. At times, the goods lose their shine because of excessive temperature, and often, mishandling by workers leads to damages. Therefore, many cargo insurance companies provide warehouse coverage. It protects the businesses against the transport liabilities that might occur between transferring goods to the warehouses. In addition, if any loss, mishap, or damage, the cargo insurance compensates the company. Hence, owners don’t have to worry about the products reaching customers safely.
What doesn’t Cargo Insurance Covers?
Many people develop a misconception that cargo insurance covers everything, but that’s not true. It doesn’t provide compensation for the risk and damages that are out of the shipper’s control. Hence, instead of setting unrealistic expectations from the cargo insurance companies, learn about what it doesn’t cover. It might vary from company to company, but here’s a list of few things that cargo insurance doesn’t cover.
- Suppose there is any damage to your goods because of poor packaging. In that case, the cargo insurance company will refuse to compensate for it. Instead, you can get in touch with the freight forwarder to ensure the packaging is safe and secure.
- Sometimes, the damage occurs due to the faulty goods inside the cargo. In this case, the policy won’t cover you since they weren’t responsible for the damage.
- Some insurance providers don’t compensate for hazardous products such as chemicals. Likewise, they don’t cover electronic products and other valuable products.
You can get in touch with a cargo insurance provider beforehand and discuss the coverage policies. If they don’t provide sufficient coverage for your product offerings, you can always look for another insurance provider.
As financial instability has been on the rise, none of the businesses have enough room to bear losses. Hence, they are exploring different insurance options to mitigate the risks. Cargo insurance has become increasingly popular because of the benefits it brings to the table. It covers the damages that might occur in the shipment’s transit. At the same time, it offers flexible policies and rates to ensure businesses don’t have to incur substantial expenses.