Cargo Insurance — What Protection Do You Have?

Anyone involved in import or export knows the risks of transportation. From stormy seas to traffic delays to lost containers to dropped cargo, there’s always something that seems like it could go wrong. Instead of crossing your fingers and hoping for the best, it’s a good idea to confront risk head-on and plan ahead for protection. For many, cargo insurance seems like the right plan.

Yes, cargo insurance helps protect a shipper’s interests, but it’s just as important to know that insurance exclusions might make that insurance less than ideal in a real-world situation. One of the biggest problems with cargo insurance is a lack of coverage for loss or damage resulting from improper packaging, a situation that comes up all too often.

It happens all the time — shippers don’t secure cargo as well as they could, and items are damaged. Insurance won’t cover this on the shipper’s end, as it’s the fault of the shipper and could have been avoided. Now that you know, it’s important to ensure that you’ve done all you can to mitigate damage and loss so that your insurance will kick in if it still happens.

Following Best Practices for Cargo Damage and Loss

Sellers are responsible for ensuring best practices against damage and loss while the cargo is in their care, and while its quality depends on steps the seller took. In other words, as a seller you need to be aware of the potential for damage while you have the cargo, while it’s being packed, while it’s being loaded, and while it’s being transported and offloaded if the risk is still with you depending on your contract.

Be sure that you’re packaging the cargo correctly to protect it for whatever journey is ahead. Using the right container type, with proper temperature and humidity control, and proper labeling are all important practices to follow.

Cargo should be secured tightly with appropriate dunnage. Distribute weight evenly across a container or package, with consideration for the fragility of items. Don’t take shortcuts!

Be sure to implement a checkpoint system where the status of the cargo is monitored and recorded at various points along the chain of responsibility, from seller to buyer. This can be very helpful in determining where and when cargo was damaged, for insurance purposes.

Importers should also implement a checkpoint, counting and inspecting goods upon receipt and noting any damage or loss, along with photos. Advise the carrier of the issue right away, and review the insurance policy if you are unaware of the exact details of what it covers and any potential exclusions.

Cargo insurance is something that’s wise to have — and is mandated in many areas — but it isn’t always going to be the only protection you need. Augment your insurance with best practices, and you can rest your head easily at night knowing that you’re covered well.

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