Why You Should Have an Open Cargo Insurance Policy?

Cargo Insurance is a type of insurance which covers damage or loss to the cargo when it is being transported by land, sea or air. This is very important for companies involved in trading of goods and also for companies involved in logistics that transport the goods to different parts of the country.

Companies involved in import and export of goods depend a lot on this insurance policy as the goods are in great volume and great value too. There are two types of cargos, domestic cargo and international cargo both the cargos need insurance policy. There are two types of insurance coverages, land cargo insurance which is transported by land and marine cargo insurance which is transported by sea. 

What is Open Cargo Insurance Policy?

When cargo is transported the insurance holder opts for coverage of large number of consignments which is known as open Cargo Insurance policy. This policy is divided into two renewable policy and permanent policy. Renewal policy is a policy for a particular value which is renewed on expiry. Most of the single trip transportation of goods comes under this category.

Permanent policy is for a certain time period and during this period a large number of consignments are sent. When a company approaches an insurance company or agent for insuring a specific consignment, it comes under certain cargo policy which is known as voyage policy as only shipments are covered   under them. In some cases customer insures the goods he is expecting and the customer may not accept the goods if damaged. In such cases the sellers can go for contingency policy where the premium is quite less.

Different Types of Cargo Insurance

There are different types of polices that exist to protect goods in transit maybe by ship, rail, air and road. The goods can get damaged in the ship, at port while transporting to the warehouse or warehouse itself. Cargo insurance is meant to cover all these damages or a policy is taken to cover all locations of goods.

Cargo insurance is taken to protect the goods during all stages of travel. As per international law there is no carrier liability. The most comprehensive cargo insurance policy is known as All Risk coverage whether it is household goods, vehicle or personal effects. All risk insurance cover is only provided if the container is professionally packed and loaded by a professional company.

Four Ways in Which Cargo Insurance is Purchased

There are four ways in which cargo insurance is purchased. In this insurance the cost of insurance and freight is already included in the selling price of the goods. In this type of insurance the ownership of the goods is transferred to the buyer at the port. The seller has to get minimum coverage for insurance.

To bring down the costs of the goods the manufacturers get foreign insurance policy which is inferior. When it comes to claiming, this type of policy may be difficult to claim and may not provide the coverage needed for marine insurance claim.

So, importers should avail of annual marine cargo insurance which is on paper for the whole year and is easy to manage.