Cargo vs. Freight Insurance: What’s the Difference?
Shipping goods from one location to another can be a complex and risky process. It is essential to obtain adequate protection for goods. Cargo and freight policies are two types of policies that can help mitigate the financial risks associated with transporting goods. While those phrases are frequently used interchangeably, they are now no longer the identical terms.
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Cargo vs. Freight Insurance: What’s the Difference?
Cargo Policy
A cargo policy is a policy that protects goods being transported by sea, air, or land. It covers the physical loss or damage of cargo during transportation. Cargo policy can be purchased by anyone involved in the transportation of goods, including shippers, freight forwarders, carriers, and logistics companies.
Types of Cargo Policy
There are two types of cargo policies:
All-Risk
This policy covers any damage or loss to cargo during transportation, except for a few specific exclusions mentioned in the policy.
Named Perils
This policy only covers damage or loss caused by specific perils listed in the policy, such as fire, theft, or collision.
Freight Policy
Freight policy, on the other hand, is a broader type of policy that covers the transportation of goods from one place to another. It provides coverage for losses related to cargo, as well as other types of losses that may occur during the transportation process. The freight policy includes liability, errors, omissions, and delay in delivery.
Types of Freight Policy
There are different types of freight policy policies available. This includes the following.
General Average
This policy covers losses that occur when a cargo ship intentionally jettisons some of its cargo to save the rest of the shipment from being lost.
Errors and Omissions
This policy covers losses that result from errors or omissions made by the carrier, such as incorrect paperwork or miscommunication.
Delay in Delivery
This policy provides coverage for losses that occur when there is a delay in the delivery of goods. This includes when the goods are delivered after the agreed-upon date.
Differences between Cargo & Freight Insurance
Let us discuss some key differences between cargo & freight insurance. Below are some differences between cargo & freight insurance.
The primary difference between cargo & freight insurance is that cargo policy only covers the physical loss or damage to cargo during transportation. At the same time, freight policy covers a broader range of risks associated with the transportation of goods.
Another key difference between cargo & freight insurance is that cargo policy can only be purchased by those involved in the transportation of goods. At the same time, freight policy can be purchased by anyone who has an interest in the goods being transported.
To illustrate the difference between cargo & freight insurance, let us consider a scenario where a shipment of valuable goods is being transported by a carrier. If the goods are damaged or lost due to an accident, the owner of the goods may file a claim under their cargo policy to recover the full value of the goods.
However, if the carrier is found liable for the damage or loss, they may file a claim under their freight policy. This will cover the cost of the damage or loss up to the coverage limit of the policy.
Marine Insurance Premium Calculator
New machinery or equipment for industrial use
Iron & steel rods, metal pipes, tubes
Electronic and white goods
All types of FMCG commodities
All kinds of food like oils essence flavours and other various packed items
Automobiles
New machinery machine tools and spares in closed ISO containers
Solar panel
Machinery machine tools spares duly packed/lashed
Stationery items
Timber and wood products
Edible oil in tanker
Aggregators/Transporters
All types of containers
All types of paints duly packed
Auto spare parts
Ceramic products and tiles
Edible vegetables or fruits and nuts or peel of citrus fruits
Granite and marble
Metal hand tools
Metal scrap in ISO container
Metals of all types excluding precious metals
Non hazardous chemicals in bags
Pharmaceuticals and bulk drugs
Rough marble in blocks
Toys, games and sports equipment
Used CPM machines and equipments
Used machinery machine tools and spares in closed ISO container
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Conclusion
Cargo and freight policies are two different types of insurance policies that provide protection for goods being transported. One may purchase marine insurance in order to cover under such policies. Cargo policy covers physical loss or damage to cargo during transportation. While freight policy covers a broader range of risks associated with the transportation of goods. Both types of policies are essential. They help to ensure that goods are protected during transit and to mitigate the financial risks associated with transportation.
Disclaimer: Above mentioned insurers are arranged in alphabetical order. Policybazaar.com does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.
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23 Oct 2024 by Policybazaar2814 Views
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*Savings of 42% are based on the comparison between the highest and lowest premiums for a Rs 50 lakh sum insured under Inland Transit Clause B or Institute Cargo Clause B for single transit cover of auto spare parts with shipment type of Inland(Domestic) and road as mode of transport. Premium varies on the basis of Occupancy, Business Activity & Coverage Type By clicking on "View Plans" you agree to our Privacy Policy and Terms Of Use and also provide us a formal mandate to represent you to the insurer and communicate to you the grant of a cover. The details of insurance coverage, inclusions and exclusions are subject to change as per solutions offered by insurance providers. The content has been curated based on the general practices in the industry. Policybazaar is not responsible for the factual correctness of these details.
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