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The importance of cargo insurance

If shipping cargo is a crucial factor to the success of your business, it is essential to have proper cargo insurance coverage. Many companies have made the mistake of not having enough coverage or even overlooking the details of their cargo insurance contracts. Either of these situations can be tragic to you profitability and long-term existence. Remember once your cargo is out of your hands, you are relying on the experience and expertise of the people loading your cargo, transporting it and even delivering it.

 

The reality is that insurance exists for a number of reasons- things go wrong, and you need proper insurance coverage to protect your goods being shipped. If you are shipping by boat, water damage and cargo, going overboard does happen. There are also risks associated with shipping via air, shipping via rail, or even sending your goods across the country on a truck. Goods get lost, stolen and damaged. Make sure that you recognise that the cheapest cargo insurance policy is not necessarily going to be the best choice.


Many try to save a little money up front by not insuring their cargo, but here are just five of the many reasons why that 's a bad idea.


1 – Reduce exposure to financial loss.
If you are planning on exporting goods that have not yet been paid for at the time of shipment, or an importer who has already paid for goods before receiving the possibility of financial loss if the goods are lost or damaged during transit.

 

2 – Contractual Requirement
Your sales contract may force you to provide ocean cargo insurance; this is to protect the buyer’s interest. Failure to do so will not only subject you to financial loss if any loss or damage occurs to the goods, but non-compliance with the terms of your contract with the buyer can lead to loss of sales and legal problems.


3 – Coverage for limited carrier liability
The carriers by law are not responsible for many common causes of loss in the transit process. Even in an incident, that they are liable, carrier's liability in the event of loss is limited.


4 – Have more control over insuring terms

Relying on the buyers or sellers insurance may be an excellent option, but make sure you are satisfied that the insurance has in fact been purchased and that the insuring terms, valuation and limits provided by each insurer on each shipment are adequate to meet your specific needs.

Now that we have explored what cargo insurance is and its purpose; hopefully, you realise its importance when shipping goods. If not, think of the consequences of not having cargo insurance.  Freight forwarders such as www.raraavis.co.za can assist with enquiries on where to go to get the best cargo insurance.