HOW FREIGHT INSURANCE WORKS

Merchants, for centuries, have tried to reduce the risks associated with conducting trade around the world to the barest minimum. Whenever goods move, there are bound to be risks involved, and their value might be partially or lost due to a host of different reasons. As a business owner, this can be very critical to your enterprise.

What is freight insurance?
Freight insurance offers and provides safety to merchant vessels' corporations, which stand a chance of losing money in the form of shipment, lest the consignment is misplaced because of the ship meeting with a mishap. This indemnity solves the trouble of companies losing money because of a few first-time events and accidents.

Why do you need to buy freight insurance? 
The plain answer is: You ought to buy freight insurance for peace of mind. The reason for this type of insurance is quite clear: It covers your commercial shipment or personal property in case of accidents when transferred by vessel, airplane, truck or train. And accidents can and do happen. During the shipping (whether nationally or internationally), your cargo is exposed to possible damages & losses: piracy, severe weather, acts of God or other unexpected situations. Freight insurance was designed to protect the cargo owner's interests while the cargo is in transit from the origin to its destination.

Types of Risk
There are three main types of risks associated with cargo transport. Insurance covers all of these depending on which coverage is used. They are:

• Loss
• Damage
• Delay

Types of freight insurance policies

• Annual 

This type of policy is ideal for frequent shippers. It is valid for a whole year and information about the company’s shipment and annual turnover are shared.  The insurance policy takes care of the shipping in advance, and the individual or company is doing the shipping do not need to worry about insurance while it lasts. 

• Named Perils 

This insurance policy covers damages caused by perils. The perils covered by the insurance are often listed in the policy.

• Open Cover 

 Open cover policies provide insurance coverage to all shipments, regardless of the value. They have no expiration date.

• Single Shipment 

This type of insurance policy only applies to a single shipment. It cannot be re-used as it is a one-time policy. It provides coverage for delivery from origin to destination and then expires. This type can be generated very quickly. 

• Total Loss 

This policy protects all shipments in the event of total loss of goods. It does not cover partial losses.


How much freight insurance do you need?
It is good to go all in when buying cargo insurance. There is an absolute peace of mind that comes with knowing that you won't suffer any financial losses in case of accidents is enough reason to ensure your cargo.