The Importance of Cargo Insurance In Courier Business
Transporting goods from one place to another has been one of the most coveted industries in different parts of the world for ages now. Some forecasts also indicate that the scope of logistics will possibly grow between 200% – 250% in the next fifteen to twenty years. Hence, it is no surprise that logistics and courier services are continuously sprouting like mushrooms here and there. But despite the success in this venture, just like the other industries, courier services may also experience downfalls, especially in terms of unforeseen eventualities like accidents during shipping whether by land, air, or sea.
Losing tons of cargo during an accident can cause serious havoc to the entire business. Good news, there’s a cargo insurance policy to protect the business from those devastating eventualities in the course of operation.
Cargo insurance is a type of policy that provides coverage near uncertainties of physical loss or damage to cargo during shipment from any external causes. The term cargo can be defined as goods, merchandises, parcels, wares, properties, and the list goes on. If you own a shipping line, then you must know the importance of delivering cargo in its best condition. Only because the company won’t earn from a big chunk of investment if cargoes are not safely distributed.
Many companies often overlook the necessity of cargo insurance without realizing that it could save them costs from the following aspects that are covered under the benefits of cargo insurance:
- Natural Catastrophes (Earthquake, Flood, Lightning)
- Damages due to improper packing
- Damages due to collision
- Damages due to heavy weather, ship sinking, or derailment
- Custom’s Rejection
- Cargo Abandonment
- Employee’s Fraud and Dishonesty
Different Types of Cargo Insurance:
As the term implies, land cargo is a policy that covers domestic land transportations including delivery trucks, rail transits, registered post parcels, courier services, and other small utility vehicles against risks of theft, collision, and other related eventualities. This policy is available for domestic or nation-based operations only.
Marine Cargo is responsible for both air and marine transportations. Some relevant issues concerning its coverage include weather contingencies, loading and unloading of cargoes, and piracy. In contrary to land cargo, marine cargo chiefly covers the international transits.
This policy covers physical loss and damage to cargoes during transit either due to some external factors that are outside of control (storm, lightning, earthquake) or major accidents such as collision, jettison, overturning of trucks, and theft. If you apply for an All Risk Policy, your company is eligible for full CIF value or Cost of goods, Insurance, and Freight with additional 10% claim that will make sure your company’s financial susceptibility is covered against certain eventualities.
Free of Particular Average or FPA
The FPA policy usually includes the same coverage as All Risk Policy’s including stranding and sinking. However, theft is not always covered by this policy. Plus, most insurers for FPA do not cover for relatively small losses or damages to cargo and is only considered liable in case of significant losses. And the percentage of deductibles may vary depending on the type of cargo and its susceptibility to loss or damage. Due to its stern rules, FPA coverage is only available to special category and list of perils.
This policy covers the carrier or the person responsible for conveying the goods. Although, there are some limitations to this policy which include defects in the transport vehicle, criminal acts, or acts of war.