Various situations may arise during international logistics transportation. Purchasing cargo insurance helps minimize risks and losses due to accidents, natural disasters, and damage during transit. It serves as the shipper’s lifeline until the cargo reaches the designated destination and is handed over to the designated recipient according to the bill of lading.
However, choosing marine insurance is easier said than done. There are quite a few combinations to choose from and too many fine print to read and understand. However, it can be slightly easier if the shipper keeps the following points in mind.
Sale of goods agreement
The sales agreement is responsible for insuring the goods in determining which party enters into the sale. In a sales agreement, where the seller is only responsible for paying Cost and Freight (C&F), or if he is only responsible for transporting the goods up to the port of loading (FOB), then the responsibility to keep the goods insured lies with the importer/buyer. If the sale agreement is Cost, Insurance, and Freight (CIF), then the responsibility for obtaining ocean freight insurance coverage is on the exporter/seller.
The type of risk and coverage is one of the most important points to consider when choosing a cargo insurance policy. The shipper should weigh the types of risks he may need to deal with and, therefore, purchase an insurance policy that will help cover them.
This is another aspect that can affect the choice of marine insurance. If it is a one-time shipment, then the shipper may consider a policy that only applies to that specific shipment. If he has regular shipments, then he can choose an open door policy.
Freight forwarder buys on behalf of
Although it is always recommended that the shipper purchase their own insurance, there are cases where the freight forwarder purchases it on their behalf, so be sure to double check. It is possible that the insurance coverage purchased by the freight forwarder may be lower than that obtained by purchasing their own cargo insurance policy and, therefore, may not be sufficient to cover losses in the event of a claim.
Multimodal Shipping and Storage
If multimodal transport is required in transit, then when selecting a cargo insurance policy, the shipper must also confirm and check that the cargo covers all modes of transport – rail, road, air, sea and storage time during transit.
Certain risks may not form part of the insurance policy and may require separate coverage. The party responsible for arranging the insurance coverage must assess all possible risks involved in the transport process, as well as the location, transshipment, storage and political situation of the countries involved in the trade.
Shippers need to keep the following points in mind to avoid insurance denials:
Provide correct shipment details Weight (net and gross), number of packages, nature (perishable, hazardous or dangerous goods).
Provide correct details of the final destination, and the final recipient of the shipment.
Make sure that the packaging of the goods is done keeping trade guidelines and product safety in mind.
Make sure that all required labels and markings are placed on the packaging.
Ensure that all additional handling instructions are provided to the carrier and its agents.
Any other possible impact on the insurer’s decision to insure the cargo and give the insurer the ability to understand the kind and degree of risk they are taking by insuring the cargo.
It is important to note that all marine insurance claims are verified against cargo insurance based on the information provided at the time.
DDPFORWORLD-Professional freight forwarder in China
DDP for World is a full-service and shipping forwarder dedicated to assisting our clients in focusing and growing their businesses. We do DDP shipping since 2015 by handling home décor, Pet products, battery, power banks, DG cargo, general cargo and Amazon FBA forwarding service. We make your shipping easier and faster by Sea, Air, Express, Truck or Railway. If you have any questions or needs about freight forwarders, please feel free to contact us, we will serve you wholeheartedly.