Types of cargo insurance definition importance Benefits

What is Cargo Insurance?

Cargo insurance is the insurance that all carriers must have. Like vehicle insurance, there is a minimum amount of insurance required for freight operator liability. This is a fairly limited version of auto repair insurance and only covers things like vehicle accidents or natural disasters. Such shippers may request cargo insurance as an addition to the carrier’s liability in order to protect their merchandise from theft, damage or loss in transit. In this article we will provide you the types of cargo insurance.

Types of Cargo Insurance

Cargo insurance works much like life or health insurance in that there are many options, each of which comes with different limitations and coverages. Below are types of cargo insurance.

1-Land Cargo Insurance

Ground freight insurance covers your shipment while it is being transported overland. Most of the time if your cargo is on a truck, you’ll want trucking insurance. If your cargo is transported or handled by a utility vehicle, you’ll also want this type of insurance. Keep in mind that this insurance is only national, so it will only apply within the limits of the United States.

The coverage offers you protection against theft, collision damage and similar risks.

2-Marine Cargo Insurance

Marine cargo insurance covers your shipment for the maritime leg of your journey. This applies to goods by sea or air. This particular insurance is international.

It offers you coverage for bad weather, piracy, damage caused by loading and unloading and similar risks.

Please note that marine insurance policies can be permanent or renewable. So if you don’t ship regularly, you have the option to choose a renewable policy and pay for one-time trips. These are going to be relatively inexpensive and represent a perfect solution for infrequent International shippers. Frequent shippers will require a permanent policy for the duration of their shipments.

Why Cargo Insurance is Important

At above you read the types of cargo insurance now we are describing its importance.

Cargo insurance is important because it provides a type of stopgap solution that goes beyond the minimum cargo operator liability requirements. Like all types of insurance, it is always better to have it and not need it than to need it and not have it. If something goes wrong, such as a shipment aboard a ship could sink or a robbery could occur at the port, your business could suffer serious financial loss.

More specifically, your company could be responsible for its share of losses throughout the shipping chain. The general average maritime principle stipulates that all damage losses that are caused by an unforeseen problem are divided among the owners of the surviving merchandise on that ship. This means that if your shipment is on board a ship with shipments from 10 other carriers, even if your cargo was undamaged after an unforeseen problem, you are still responsible for compensation to the other owners whose cargo was damaged or lost. . If 9 out of 10 businesses aboard that ship suffered damage or loss, you might be the only business to come out ahead, but now you’re on the hook for compensating them. There is no doubt that having insurance could protect you in these cases.

In either case, having insurance protects your business against devastating losses when these things happen. The degree of coverage for your shipment will vary depending on the details of the policies you have. To do this, it is imperative that you review the fine print on your policy before signing on the dotted line.

Different Types of Cargo Insurance

1-All Risk Coverage

Comprehensive coverage is the most comprehensive coverage you’ll find with a large area of ​​protection. In general terms, this coverage will apply to physical losses and damages that are the result of an external cause. Please note that this usually applies to approved products or in general. There are exclusions, of course.

Damage to your cargo due to negligence is not covered most of the time. An example of this would be sending something that is time sensitive even though you know there is a congestion problem on that port.

Inherent Vice is normally excluded. This refers to the deterioration of your cargo simply due to the cargo itself. Wine and beer, for example, qualify as inherent vices because they can be affected by changes in temperature or movement during transit.

Other exclusions include abandonment of cargo, war, strikes, riots, civil riots, customs refusal, loss of use and non-payment. Other external factors that are not covered could include pollution, infestations, earthquakes, etc.

2-Coverage of Named Perils

Within this particular coverage you only receive the losses caused by the Risks that are mentioned in the policy. This can include things like ship collision, ship sinking, bad weather, earthquake, theft, derailment or non-delivery. Remember that only the things mentioned can be covered, so these types of policies are more limited.


Cargo Insurance provides you with coverage for the duration of your shipments’ journey. You can protect your shipment against damage or loss, the result of external factors. With cargo insurance you can even protect your shipment while it’s on the ground but still en route to the buyer.

If a shipment is lost at sea, for example, the carrier’s general liability will be insufficient to compensate for the losses. If a shipment is being transported on a container ship and it sinks, the cargo operator’s liability will be insufficient and your company could suffer a fall. If your truck is involved in an accident on the road, your company is responsible for its share of the losses that could negatively impact the bottom line of your operation. But with Cargo Insurance none of this will happen in the event that the worst happens.

Should I Request Cargo Insurance?

In short, cargo insurance is very important. There are serious consequences associated with not having cargo insurance. In order to protect your company from serious losses and possible liabilities, requesting cargo insurance is a must.

We hope that after reading this article you have understood the types of cargo insurance.

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