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 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.

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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.

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.

Written By: PolicyBazaar - Updated: 20 March 2024

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Policybazaar for Business - Marine Insurance - Customer Reviews
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4.3/5
Based on 114 reviews
4.3
out of 5
Based on 114 reviews
14 users
87 users
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0 users
3.8 April 20, 2023
Anas
Great Experience
I recently purchased Marine insurance from Policybazaar for my shipping business and I must say I am thoroughly impressed with their service and coverage. From start to finish, the experience has been smooth and hassle-free.Thankyou.
Mizoram
4.3 April 03, 2023
Vaishnav
Provides Comprehensive Protection
When it comes to coverage, Marine insurance that i bought from PolicyBazaar has exceeded my expectations. It provides comprehensive protection for my cargo and vessels during transit, ensuring I can focus on my business operations with peace of mind. Thankyou.
Assam
4.3 March 17, 2023
Umang
Excellent Services
I highly recommend Marine insurance from PolicyBazaar website to anyone in the shipping or logistics industry. Their user-friendly website, comprehensive coverage, and excellent customer service make them stand out from the competition. With Policybazaar, I feel confident in navigating the high seas, knowing that my business is well-protected. Thank you, Policybazaar.
Chennai
4.3 February 28, 2023
Vishal
User Friendly Interface
The website's user-friendly interface made it easy to compare different plans and find the perfect fit for my business needs.Thanks
Gurugram
4.3 February 11, 2023
Parth
Prompt Services
I appreciate the transparency and honesty with which Policybazaar handled my claims. They were prompt in processing my claim and their claim settlement process was hassle-free.Thanks PolicyBazaar.
Noida
3.8 February 10, 2023
Rishabh
Exceeds Expectations
I recently had the pleasure of purchsing marine insurance from Policy bazaar website and I must say it has been an outstnding experience from start to finish. I am thrilled to share my positive customer review, as this truly exceeded my expectations. Thanks PB.
Jamshedpur
3.8 January 31, 2023
Arvind
Easy Navigation
The ease of navigating the Policy bazaar website and finding the right marine insurance policy was impressive. The website's user-friendly interface and intuitive design made it incredibly simple to compare various options, understand the coverage details and make an informed decision. I appreciated the transparency provided throughout the process. Thanks.
Ajmer
3.8 January 21, 2023
Vishal
Excellent Support
The customer service provided by Policy bazaar was decent. Their team was responsive, knowledgeable and went above and beyond to assist me at every step. Their professionalism and commitment to customer satisfaction were truly commendable.Thankyou.
Mumbai
4.3 January 11, 2023
Sanjeev Rathor
Efficient Process
When it came to claims processing, Policy bazaar demonstrated remarkable eficiency and effectivenes. I had an unfortunate incident during the coverage period and filing a claim was a breeze. The entire process was streamlined and their team guided me throuugh every necssary step, making it hassle-free. The promptness with which my claim was setled reflected their commitment to their customers' well-being and peace of mind. Thankyou.
Pune
3.8 January 01, 2023
Kunal
Comprehensive Coverage
I must mention the comprehensive coverage provided by the marine insurance policy I purchasd through Policy bazaar. It offered me the necesary protection and peace of mind. Thankyou PolicyBazaar.
Indore