1. Аccidents happen
The technology is developing evermore, but the transport still remains a risky business. The risk could be managed by choosing a reliable logistics service provider, an appropriate transport packaging, as well as purchasing a cargo insurance.
The different types of transport show different kinds of losses and damages. Nevertheless, the cargo handling operations have proven to be the riskiest part of the carriage In this regard it is important to note, that the small groupage-freight shipments need to go through more transshipments in different warehouses before they reach their destination.
While the truck drivers are resting at specialized truck parking or while the containers are waiting for loading at the port terminals, the goods are vulnerable to actions of well-organized bands of thieves. Unfortunately, such occurrences happen not only in less economically developed countries but also in Western Europe. The costly goods e.g. computers and home appliances are the most attractive objects, but the thieves are also happy to leave with less pricey items, even food products.
The vehicles and vessels remain vulnerable to the elements. While the containerships get bigger and more reliable, there are still approximately 1600 containers lost at sea per year, 64% of which due to severe weather conditions. (source – World Shipping Council).
The marine insurance remains an irreplaceable tool for controlling these perils regardless whether your business ventures are local or international. If you buy your marine insurance under Institute cargo clauses A your goods will be covered against all risks except for those explicitly excluded.
2. Losses may be big
Тhe marine insurance is a necessity for the carriage of costly goods, because carriers have limited liability. Depending on the choice of insurer you may insure your goods up to a certain amount above their invoice value and in case of loss you will be indemnified according to its rate. The cargo insurance may also cover not only the purchase invoice value but also may cover part of the duties and taxes, as well as additional delivery costs.
3. Carriers pay only up to a fixed amount
If you are arranging transport for light but costly goods the marine insurance is the proper solution for you. All international transport conventions, local laws, and standard terms and conditions which apply to your contract contain a clause setting a limited amount of the carrier’s liability. This amount is calculated by special formulae, based on the weight of the goods. These formulae differ depending on transport mode and the applicable law.
Nevertheless, for the most common cases we can make a conditional comparison between the compensations each type of carrier will pay by 1st March 2018 for a kilogram of perished goods:
Often the cargo interests have the misconception that carriers purchase insurance for their goods. Actually, the carriers buy goods in transit insurance which covers only their legal liability i.e. if a hauler breaks a laptop which weighs 1 kg and costs € 1000, the hauler has actually insured his liability for € 9,88 instead of the value of the goods.
4. … but sometimes they don’t pay anything
The marine insurance pays if the loss is due to such event, as long as it is not explicitly excluded.
Apart from the limited amount of liability the international conventions and local laws contain clauses which relieve the carriers form their duty to compensate your losses if the loss is due to a specific circumstance. In this regard, the ocean carriers once again are in most privileged position. Most of these circumstances fall into the category of Act of God, e.g. natural catastrophic events, or other unforeseeable and unavoidable events. Another example of such circumstance, which excludes the liability of the carrier, but is covered by the marine insurance is an accidental damage during handling operations performed by the consignor or the consignee.
5. Faster handling of the claims
In most common cases to settle a marine insurance claim takes much less time in comparison to a liability claim. This is valid especially for claims where the cause of damage is uncertain or the claim is for a significant amount and requires a thorough investigation. If it may be reasonably assumed that the loss is due to an event, which the carrier cannot be held liable for, the carrier can make such objection. In such cases, the claimant will have to prove that the loss is due to another event. The carriers also make objections that actions of the consignor or the consignee have contributed to the occurrence of the loss.
If the carrier has goods in transit insurance he/she often waits for the expert’s opinion of his liability insurer and may also request further evidence in accordance with his, which may additionally slow the process.
6. Transfer of the coverage from seller to buyer
The marine insurance “follows” the goods, instead of the party who purchased it. If you are the seller and purchase a marine insurance your client will benefit from it after the risk passes to him in accordance with your arrangements.
In this regard, it is important to point out that the seller’s obligation under CIF terms is to purchase insurance with minimal coverage i.e. Institute cargo clauses C for listed risks. If you buy your goods under CIF terms, our advice is to always request from your seller a purchase of marine insurance policy for all risk- Institute cargo clauses A.
7. Marine insurers cover costs from general average
General average is the losses arising from the voluntary sacrificing part of the ship or cargo by dividing the costs among all those whose property (ship or cargo) was preserved by the action.
Examples for general average are jettisoning cargo in order to free a grounded ship, or putting out a fire in a manner, which damages other containers with water.
The statistic shows that:
Cargo owners, whose goods were not affected by the disaster must also contribute to the sharing of the loss. When a general average is declared the shipowners get a right of lien over the cargo and may retain it until the provision of a bank guarantee or a cash deposit. The marine insurance covers these costs.
Single trip or annual cover
Marine insurance offers flexible solutions for meeting your business demands. If your business operations require regular deliveries you may choose between the purchase of a single trip policy or an annual policy. The administering of an annual policy is easy and is done by reporting the shipments for past periods.
Have questions? Our Customer Hub is here to help: 0800 800 00 (national), +359 52 818 008 (international)