Whenever goods move from one port to another, they are subject to potential damage and their value may be partially or totally lost due to a wide range of risks and exposures. This can be quite critical to your client. The hazards involved in conducting trade around the world, and in particular the risk of losing cargo at sea is why a transit insurance policy is so vital. The need for cargo owners and shippers to lessen the likelihood of lost or damaged goods during transit is why these policies exist. There are many cases in which you need to make sure assets in transit are protected from physical loss or damage, either internationally or domestically. It’s important to verify when the loss or damage took place and who is responsible for the goods in question.
When customers use freight forwarders, which are advised for most exporters, they pay them to ensure their product(s) reach their destination safely and without delay. But a comprehensive insurance policy is not something that is offered as standard. Sure, the customer will be insured, but on a limited-risk basis, which is perfectly reasonable because the freight forwarder only takes a limited fee for the work that they do. The bulk of the value lies with the actual shippers, and the freight forwarder is only liable for errors made by that company, not by ship owners.
Policies specific to shipping goods
Truck policies for cargo cover theft while a vehicle is unattended, or if damage to the goods is due to collisions or movement while in transit, etc. Marine policies apply to sea and airfreight and cover loading/unloading issues with the vessel or airplane, weather issues, and other hazards that may take place.
A common misconception can lead to huge financial losses for business owners. The shipper sending the product to a specific destination often assumes that the carrier is responsible for transporting the product in perfect conditions, or compensation if the product is somehow damaged. However, the fact is that carriers cannot be held responsible for any damage or loss incurred by natural disasters, which are unpredictable and, although they only happen on rare occasions, the fact is that those goods could get damaged or wet while on board.
Owners and shippers have to make sure that the consignments are packed well, but also need to buy an adequate transit insurance policy in case the unexpected happens. As a broker you should discuss insurance needs with individual clients based on specific circumstances.