Cargo insurance is vital for any shipper. It is the ultimate way to reduce financial losses. Importing and exporting goods without cargo insurance will eventually lead shippers to huge financial losses. Therefore, such a risk is better avoided. There are several reasons why shippers should insure their shipments. In this article, we list some of these reasons.
In recent years, cargo theft has been rising. Whether it is done by pirates or?fictitious pickups, it results in heavy losses for shippers. In order to avoid suffering such major losses that will have a drastic impact on your company, you should insure your cargo. Cargo insurance will allow you to ask for compensations and refunds if anything unpleasant happens to your cargo.
Containers loss became a wide phenomenon in international sea shipping. According to?The World Shipping Council, approximately 200 containers are lost in the sea every year. This is a huge number. The container containing your cargo could be one of these containers. Thus, safe is better than sorry. Paying an extra insurance fee is better than losing your container without compensation.?
Natural disasters happen and no one can either expect them or do something about them. They often result in drastic financial losses. One natural disaster is enough to make an entire shipload of cargo containers disappear in the sea.?
Every year natural disasters affect many shippers and they end up regretting not having cargo insurance. Do not?be among those who bite their finger of regret, be wise.
If you believe once you packed and loaded you cargo it is safe, you are wrong. In fact, cargo, whether packed or not, is prone to damage. Cargo damage is common and it occurs more frequent that you can possibly imagine. The?UK P&I Club points out that: "25% of the damage is physical, 14% temperature related, 11% containers lost overboard, 9% theft and 8% shortage".
Other claim areas such as?sinking, contamination, and infestation represent 8% of cargo damage. These numbers and statistics show that Cargo damage, although it is not expected, it remains a high probability.?
There are several reasons for cargo damage. These reasons include?Overloading,?Wrongly declared cargo,?a poor condition of containers, wrong choice of containers and so on and so forth. In fact, we can never count the reasons that cause the damage to your cargo, they are too many. Yet, getting cargo insurance will ease your mind from worrying about cargo damage, because even if your cargo gets damaged, you will be compensated.
General average - Expedite cargo release
First of all, let me explain what the General Average is. The general average is an international principle that states all parties should share the losses equally if certain types of accidents happen to the containers. Believe me, you do not?want to be in such situation without a proper insurance to cover your back.
Following a general release, you may require a cash deposit to release your cargo even if your cargo is intact. Having an insurance means that it is your company?responsibilities to expedite the release of your cargo.
Limited carrier liability
The law states that carriers do not assume responsibility for many common unfortunate causes of loss during the transportation of cargo. These causes include the general average, natural disasters, acts of god and so on and so forth.??
Even when carriers are liable, their liability is limited. Thus, you will not be able to recover but cents on the dollars. Therefore, you should never rely on carriers shipping your good to cover your losses and damage. The only guaranteed thing that will cover your losses is cargo insurance.?
These are just some of the reasons why shippers need cargo insurance. Any shipper should keep in mind that without adequate cargo insurance, he or she will face great financial losses alone that may have drastic effects on his or her business.