Cargo Insurance Considerations

When shipping supplies to your firm or products to customers, safety comes first. You want to ensure that you do not incur any losses owing to damage of the package in transit. As such, cargo liability insurancebecomes vital.

Although many business owners do not understand the growing business in ship transport, they applaud the introduction of shipping insurance. As Forbes puts it, “The cargo shipping business is highly cyclical, a fact that many ship owners have not seemed to have grasped.” Regardless of this, many acknowledge the purpose of shipment insurance. This coverage has seen many be compensated by the insurance firms due to the damages caused on their goods.

Given the importance of cargo insurance, it pays to trust only the best company with your package. The insurance firm you pick for the purpose has to meet the standards needed for cargo insurance services. This is in regards to insurance premium, rates of insurance and the services offered among other factors. Before you select any insurance company, see to it that you look at its history, reputation and the relation it has had with other clients.

The nature of your products also counts when it comes to cargo insurance. A firm may choose not to insure some products. Therefore, you have to ascertain that the products you have are included in the firm’s list of goods insured. The nature of the goods will also lead to the variation in costs, rates and other factors.

Consider exactly what the firm is offering you. Often, insurers will compensate for damages caused by any factor including third parties. This covers all scopes of damage. However, there are those that will compensate only against the factors that you stipulate. As such, you need to verify with the insurance firm what factors of damage they insure against.

Also, consider their claim policies. Will it take forever for a claim to be compensated? You have to ensure that the firm you are planning to buy the cargo insurance quote from has a favorable claim policy. Understand their special clauses, process and formalities involved when making a claim and such factors beforehand. This way, you are able to gauge whether the company is right for you.

The above are some of the parameters that you have to consider prior to selecting a cargo insurance firm. To learn more about cargo liability insurance, contact us.

Understanding Your Cargo Insurance

Not all cargo insurance are the same. The breadth of coverage, service, pricing, and loss prevention varies with each insurer. A low cost policy might save you money, but it could also mean you have less coverage. Because cargo insurance covers the legal liability of the carrier as the transporter of freight, carriers cannot afford to be cheap with cargo insurance. The carrier may have to do some research, but if the carrier knows what to look for, there are many cargo insurers that offer good policies at an affordable cost. It also helps if the insurance agent that understands the nature of your business.

Here’s what to look for when considering cargo insurance:

1. Description of Covered Property: This section of the policy informs you what is covered and what isn’t. For example, if you have a policy that covers only ferrous metals, it the cargo doesn’t contain iron, aluminum, or copper, it wouldn’t be covered. If the policy excludes garments, clothing wouldn’t be covered. Another example is that if the policy excludes electronics in which anything that can be plugged in or uses batteries wouldn’t be covered.
2. Insuring Agreement: There are two different types of insuring agreements. Be sure to know which insurance agreement you have. The Named Peril Policy covers only those perils that are listed, subject to exclusions. Perils include the overturn of a vehicle, collision bridge collapse, and so on. Theft is usually covered, but exclusions or endorsements may remove coverage for driver theft or theft from a vehicle which was left unattended. If the incident in question is not covered on the list then you will not be covered.
3. Exclusions: This is the section of the policy where you find that certain perils are not insured. Exclusions, as mentioned above, included theft by the drive (or any other employee), theft from an unattended vehicle (many policies will cover an unattended vehicle if it is completely locked and located in a secure place), and loss when the trailer is not attached to a power unit.
4. Scheduled Vehicle Policies: When the FMCSA removed the cargo insurance requirement, the BMC-32 endorsement was eliminated as well; therefore, the use of a truck that is not listed on policy will no longer be covered. No exceptions.
5. Endorsements: Endorsements covers modifications to the policy. This allows the insurer to expand, restrict, or eliminate coverage. One example is that some cargo policies exclude temperature damage, but with a endorsement coverage is provided if the damage is caused by damaged refrigeration unit. Pay close attention to endorsements since they can add to or limit your policy. Endorsements included removal of refrigeration breakdown coverage due to lack of maintenance records, providing limited theft coverage for unattended vehicles if certain security requirements are met, or removal of any theft coverage for an unattended vehicle. Carriers make a common mistake of looking only at the Exclusions section when analyzing a cargo policy. Be sure to read the full policy and understand its limits.

Do your research and find an insurance agent who has working knowledge of your industry and will answer your questions.  

Do Freight Brokers Really Need Auto Insurance?

Freight Brokers wrestle with many questions when deciding cost management strategies. One of the biggest is whether or not they need Auto Insurance. The straight forward answer is absolutely. There are so many unpredictable, uncontrollable forces out there, (accidents, storms, hijackings, theft, vandalism) that it's impossible to avoid a lawsuit sooner or later, even if you have nothing to do with the incident. Just having your cargo there can put you at risk. If a truck gets into an accident, the first thing lawyers want to do is drag everybody they can into court. The average claim on an auto accident is about 2.6 million dollars. Without proper Auto Liability Insurance, such a claim can be devastating to a business. Liability costs for shipping skyrockets, severly impairing profitability.

There are many steps you can take to protect your assets and not face serious punitive damages as a result of death or injury from the movement of freight. One of the best steps is having someone with years of industry experience to review your current business model & current contracts in place. GSIS, Inc. is a leader in Risk Management education and Insurance Solutions. Our company is focused on educating our clients on risk management stratagies for the freight broker industry. We are always interested in spreading current news topics relating to the industry including major catastrophes and current laws that effect the Freight Broker/Transportation industry. Contact us at http://www.gsis.com

Here at Global Solutions Insurance Services Inc. we deal in the many forms of domestic and international trade insurance and our trained professionals help you choose a policy that fits your needs perfectly.

Domestic Freight Broker Contingent Cargo Insurance & It’s Importance In a Freight Brokerage’s Operation

 

Claims and law suits relating to lost or damaged cargo can arise because the trucker’s motor truck cargo policy doesn’t respond to the claim, we offer several cargo insurance programs to address each Freight Broker’s unique shipper/customer base, the sensitivities and risks involved therein.

• Contingent Cargo Legal Liability

• Contingent Cargo Broad Form Policy

• All Risk Domestic Shippers Interest Cargo Coverage

• Instant Excess Cargo coverage 

Contingent Cargo Legal Policy 

This coverage responds to defense and damage payments associated with a freight broker being named a party to a law suit including a third party motor carrier’s fatality or injury accident. This represents the greatest financial risk to freight brokerage operations. Judgments have been as high as 24 million against a freight brokerage operation. Our freight broker auto liability policy with a duty to defend, will provide defense, pay defense costs and any attributable damages, or settlement up to policy limits. Our primary policy covers up to $1 million “per occurrence” versus other forms in the market which may have an “annual aggregate limit”.

Contingent Cargo Broad Form Policy

This coverage is required when a freight broker agrees to assume responsibility for cargo loss or damage that a motor carrier fails to pay. Whenever a freight broker signs a contract with a customer client it should be reviewed to determine if it is expanding the freight broker’s liability assumed under their D.O.T. domestic freight broker authority. Often these contracts contain indemnity clauses which require the freight broker to assume responsibility for a cargo claim should the trucker fail to pay for loss or damage associated with the freight. This coverage is available for FTL (Full Truck Load) shipments for most commodities shipped. However, certain high risk cargo exposures i.e. liquor, tobacco, high valued electronics, cell phones, copper and other non-ferrous metals require Broad Form cargo coverage with a strategic risk management program to reduce theft.

All Risk Domestic Shipper’s Interest Policy

The movement of freight with LTL motor carriers requires a broader form of cargo coverage than provided by motor carrier’s with legal tariffs where liability is limited to as little as $1 per lb. We can set up a shipper’s interest cargo program where coverage is purchased on a shipment by shipment basis for those shipper’s who want full replacement cargo coverage in place. We provide an on-line web based insurance platform that allows coverage to be instantly placed.

 

High Risk Cargo Program for Freight brokers who decide to move high risk cargo won’t typically qualify for a Contingent Cargo Broad form policy but rather will require a primary cargo program where adequate security in the movement of freight must be present. We can successfully place cargo coverage for these high risk cargoes, when proper security is present in the movement of this freight.

Instant Excess Cargo Coverage

When a truckers MTC policy limit is not high enough for the value of the shipment (most have only $100,000) you can purchase instant excess cargo insurance by going to www.fiasap.com . This allows a freight broker to have more flexibility in assigning a trucker to move a shipment. The cost for this instant excess cargo insurance can often be passed along to the trucker or built into the freight charges to the shipper. If any given account has enough volume of shipments, that require excess cargo coverage, a policy can be established for that account.

 

  

A Freight Broker’s participation in Broker Shield can support their marketing activities. A Freight Broker dedicated to Risk Management, fully bonded and insured, is a more attractive logistics provider to Shippers. Such Freight Brokers offer shippers the prospect of better service and on-time delivery to the Shipper/Customers. A Freight Broker’s client can also be added as “Additional Insured” under the Freight Broker policies, extending legal defense to these parties. This can be a very substantial value added service that separates one domestic logistics operation from another, and is a better alternative to certain shipper agreement provisions that may impose commercially unfeasible assumption of responsibility and/or Insurance.

For a Quote, or to talk to a GSIS representitive click here.