Industry experts estimate that over half of goods transported around the globe are uninsured.
One of the biggest misconceptions amongst cargo owners is they don’t need to purchase cargo insurance when using a freight forwarder.
The primary reason for cargo owners refraining from buying cargo insurance, sometimes referred to as marine insurance, is the assumption that by using a freight forwarder, the cargo is automatically insured.
Whilst the freight forwarder will have insurance, this insurance will only cover the forwarder, and crucially, not the cargo owner.
In addition, you’ll find the forwarder will also have a limited liability that will be stipulated in the terms and conditions agreed when you arrange your booking.
In this blog, we detail what cargo insurance can cover, examine The Ever Given incident in 2021, and explain why you should have cargo insurance.
What is cargo insurance?
Cargo insurance is an insurance policy that covers your cargo from various risks during transit.
What does cargo insurance typically cover?
There are a wide variety of cargo insurance policies that cover different things, but some general items that are covered include:
Damage during transport or handling
General Average liabilities associated with accidents, such as the ship capsizing, sinking, being grounded, or colliding with another ship (General Average can require all the cargo owners on a vessel to contribute financially to loses accrued by the vessel owner as a result of certain accidents)
Explosions and fires
There are other items that can be covered as an additional extra, such as:
Impact of war or natural disasters, and
Strikes, riots, civil unrest, theft.
A poignant reminder: The Ever Given
Everyone remembers the Ever Given, one of the world’s largest container ships, carrying over 10,000 containers, running aground in March 2021, blocking the Suez Canal. The impact was far-reaching.
Around 400 ships got caught up in the log jam, some diverting course around South Africa, adding 10 days to their voyage.
Based on the value of goods moved through the Suez Canal every day, it was estimated that the cost to global trade was in the region of $400 million per hour, with claims totalling over $2billion.
Eventually, General Average was called by the vessel owner; requiring all cargo owners to contribute to the costs of any loss.
In this case, it included a huge damages claim from the Egyptian authorities, that was eventually settled for a figure reported to be between $200-$500 million.
Why should I have cargo insurance?
Put bluntly, without cargo insurance, the items you ship will be at risk.
While the carrier may be responsible for any damage, loss or theft that affects your goods while in transit, any claim you make will be limited by the weight of the goods, and in most cases, this can mean that you only recover a fraction of the actual loss.
The carrier’s terms and conditions are there to protect the carrier, not the customer. Claims of this nature can be complicated and ultimately take a lot longer.
A cargo Insurance policy can ensure that you make a full recovery and in a time that is more suitable for you.
How can GCL help?
At GCL, we can provide insurance quotes for individual cargo shipments, as well as an “annual cargo cover” that will cover all shipments for a 12-month period.
We can help you create a bespoke policy fit for your business needs, to ensure that your cargo is covered for all eventualities.
To discuss arranging cover, contact us today via email at firstname.lastname@example.org, or call the GCL team on 0208 844 4040.