For business owners, it is essential to protect cargo goods from various possible disasters. A marine cargo insurance policy is one of the best insurance covers that will help you safeguard your valuable cargo anywhere in the world. A cargo insurance policy will protect your cargo from any loss or damage caused during transit via road, sea, rail or air.
What is Cargo Insurance?
Cargo Insurance policies are designed to provide indemnity cover for goods/cargo carried through different modes of transport and transit.
A lot of money goes in packaging and transporting shipments. And any loss or damage would mean a huge loss. To cover up such losses, it is important to have cargo insurance in place.
Freight insurance can also be taken for goods during shipment. It helps in mitigating the risks related to the shipping process and helps you ship your goods in a more secured manner.
You can buy freight insurance directly from the shipper or an insurance provider.
Types of Cargo Insurance Policy
There are various types of cargo insurance in India. You can buy cargo insurance cover that suits most of your requirements such as import, export, transit within India, single voyage etc. Let’s have a look in detail-
- Open Cover - An open cover cargo insurance policy is suitable for goods that are imported and exported. It is issued on a contractual basis for a period of 12 months. Under open cover cargo insurance, the insurance provider agrees to cover all the shipments that are within the scope of coverage. An open cargo insurance cover policy is based on an unstamped agreement.
- Open Policy - This cargo insurance policy is issued to cover the transit of goods within India. Open policy is valid for a year. It covers all the goods in transit that are declared by the policyholder, which is subjected to the overall sum insured limit.It is issued on a stamped document. And stamp duty is taken in advance along with the premium. Usually, the premium is collected in advance for the complete estimated value during the policy term. In such cases, specific cargo insurance policies are not issued for each shipment.
- Specific Voyage Policy - This type of cargo insurance cover is suitable for a single transit or voyage. The policy is generally issued before the transit starts. On completion of the voyage, the coverage will cease immediately.The specific voyage policy usually contains all the details of Vessel name/conveyance/ Bill of Lading/ Waybill and date along with policy terms, conditions and sum insured details similar to the other marine cargo insurance policies.
- Annual Policy - This type of cargo insurance policy offers coverage to goods in transit by rail, road, and sea from stated depots or processing units that are hired or owned by the policyholder. It is required that the goods covered must be held in trust or belong to the insured.These policies cannot be issued to transport operators, freight forwarders, commission agents or to anyone in joint names. Annual policies cannot be transferred or assigned.
Why Do You Need Cargo Insurance?
To save your shipments and recover the money invested in such consignments, it is important to have the goods covered under a cargo insurance policy. It is helpful in the following circumstances:
- Import and export shipments
- For goods that are moved from one place to another by river transport
- For goods being transported by sea, rail, air, road or post
- Goods being transported by coastal vessels from one port to another
- Cargo moved by country craft or small vessels over inland waters
Coverage Provided in Cargo Insurance
The insurer will compensate you for any damage that is caused to your shipment due to the specified natural and man-made disasters. Cargo insurance usually covers the loss or damage caused to the property due to the following reasons-
- Explosion or Fire
- Sinking or Stranding
- Spillover or derailment
- Washing overboard
- Any damage during discharge of consignment at the port of distress
- Salvage charges
- Total loss overboard or while loading or unloading
- SRCC and war conditions are specifically covered in some cargo insurance plans
Benefits of Purchasing Cargo Insurance
The major benefits of cargo insurance policies are listed below-
- Cargo insurance plans are freely assignable
- The existence of insurance interest needs to be established only at the time of loss
- Most of the marine cargo insurance policies are based on an agreed value
- Marine car insurance policies are usually transit policies and are not restricted to a precise period
Does Cargo Insurance Have Limitations?
The policy does not cover loss or damage to cargo insured due to-
- Fault in the preparation and packaging of the insured cargo
- Any deliberate attempt or misconduct by the policyholder
- Delay of the shipment
- Ordinary leakage
- Any ordinary loss in volume or weight
- Any kind of inherent flaws
- Financial distress and insolvency of the carriers
- Ordinary wear and tear is not covered under marine cargo insurance
If you file a claim due to the above-mentioned reasons you will not get compensation under your marine cargo insurance policy.