The Importance Of Cargo Insurance
Rob Gardenier | M.E. Dey & Co.
We all know that cargo sometimes suffers damage. You may have your own “marine” insurance policy and believe that it is perfectly placed to reimburse you for damage to your cargo. It may be a good time to examine the coverage of that marine policy. In our opinion, marine insurance must be an ‘All-Risk’ cargo policy. An ‘All-Risk’ policy will cover physical loss or damage from any external cause and includes General Average. Further, a good cargo policy should cover ‘Warehouse-to-Warehouse’ meaning that the insurance coverage extends to your goods temporarily stored during the normal course of transit. Any exclusions not covered by the policy must be clearly listed.
Furthermore, a good policy should not have a deductible. A deductible is the amount of damages you will absorb in an insurance claim before the insurance coverage starts paying you. Deductibles are business as usual for cargo that’s easily damaged, including: glassware, bagged goods, autos, goods required temperature control in transit, etc. Though for most goods, a deductible is not asked for by the insurance company but instead offered as a way to reduce your premium. Often, when insurance premiums are low, the policy has a substantial deductible, meaning that you are responsible for a substantial portion of the loss. Some policies have as much as a $10,000 deductible! Consider the risk tolerance. How much of a loss are you willing to absorb?
But doesn’t the transportation carrier pay my losses? For a carrier to be liable for losses or damages, the shipper must prove that the freight was in good condition when given to the carrier, then later delivered damaged or not delivered at all. A damage claim must be filed timely. Transportation carriers all have limits in what they cover, unless additional valuation is declared. Steamship lines have a maximum limit of $500 per container, while Airlines have a limit of about $1.42 per kilo. Arranging your own insurance coverage provides quick financial reimbursement to you in the event of loss or damage. The insurance company can then go after the carrier, terminal, or warehouse if they so choose.
In the end, use reasonable care and examine your marine cargo policy. Does it meet your needs? M.E. Dey & Co. insures cargo daily for many of our customers who request it. We offer ‘All-Risk’ insurance and for most cargo, no deductible.