Insurance

The Scope Of Cargo Insurance Coverage

The general scope of cargo insurance coverage is international. Since it compensates for damage or loss based on the insured goods’ value, it is a contract of indemnity. Cargo insurance covers the goods throughout the whole shipping process, whether the cargo is traveling by air, land, or sea. The specific coverage will depend on the goods (such as commercial freight or cars) that are shipped and the mode of transportation.

Either the buyer or the seller may arrange the insurance, whoever is responsible under the sales contract. Unlike property or liability insurance, the coverage available under cargo insurance is broader and industry specific. How the cargo is traveling with also have an impact on the policy. In marine cargo transportation, for example, specific marine risks are covered that wouldn’t be necessary in air or land transport. Since most goods are transported by seas, this is the most common type. Of course, many shipments use more than one mode of transportation, so broader insurance would be necessary.

The scope of cargo insurance coverage doesn’t cover all damages. There are some restrictions placed. In some cases this is due to certain commodities’ loss records. Other exclusions come from how the shipment is damaged. In general, damages caused by war or hostilities are not covered. The nature of the property and delay is also unlikely to be covered. Though not everything is covered, cargo insurance is a necessity when doing international shipping to ensure the that financial interests of the cargo owner are protected.