Whether you’re a frequent importer/exporter or are shipping an item internationally for the first time, the question, “do I need cargo insurance?” is likely to pop into your mind.
In fact, you might even be thinking, “I’ve mailed things domestically one hundred times and it’s always been ok” or “they really can’t lose something THAT BIG, can they?” The simple fact is that international shipping involves many more hands than a domestic shipment and just because a container isn’t lost, that doesn’t mean you won’t experience a total loss.
Though you may not feel like you need insurance, in the event of loss or damage, you’ll be glad that you sprung for the extra coverage, as it pays for itself in the end. As an illustration to the process of filing a claim, I am choosing a recent example that we came across involving a customer who was shipping agricultural farming equipment from Istanbul, Turkey to Kansas City, Kansas in a 20′ open top container out of gauge. Freight terms were DDU (delivery duity unpaid).
Forwarders are not obligated to mention insurance, but, a reputable international shipping company will always ask if insurance coverage is wanted. So this customer was faced with the choice. Do they spring for the extra insurance coverage or let it up to chance?
What is Cargo Insurance?
It’s insurance that covers a shipment that can include personal effects, household goods, cars or commercial vehicles, or any kind of industrial shipment. Shippers gather their freight rates based on the specifications of their shipments and will need to know and convey to their international freight forwarding companies their freight terms.
Freight terms will drive the freight proposal, but won’t always indicate if insurance coverage is requested – just WHO is responsible for what.
Shippers are advised to ask the sender to approve or decline coverage. Cargo insurance rates are based on the products, the destinations, and the commercial value of your shipments. Cargo insurance will cover the cost of the item in the shipment in the event that the shipment is lost or damaged during the shipping process.
It is very important to review international cargo insurance companies in Australia when shipping out of the country.
What Happens to Non-insured Cargo?
Should you decline insurance coverage or neglect to insure your shipment, you are taking the risk that, should a loss or damage occur, you will not be able to seek repayment for the cost of the shipment most likely resulting in a loss to you or your company.
Although, if gross negligence or mishandling of the shipments while in the possession of the carriers (steam lines, airlines, terminals, trucking companies) is determined in due time with the respective documentation and signature of the carrier’s representative at the time of the delivery, shippers can file a claim against that carrier.
However, the liability coverage from carriers is limited and in most cases will amount to nothing or very little.
IMPORTANT NOTE: Usually, the forwarders are not the carriers, unless they own the delivery trucks. One of the benefits of working with a freight forwarder is that you’re not tied to any single network or carrier line, which will give you access to more routes and price points, and a more timely and cost effective shipment. So, they won’t be liable, but the right crew would certainly help you navigate through a sticky situation like this.