Freight Insurance and Why You Need It
Regardless of the frequency, size or value of your cargo, securing appropriate freight insurance is always a good idea. This is especially important if you’re moving goods long distances or internationally and dealing with different transport operators and authorities along the way.
While freight forwarders work hard to get your goods from point A to point B in one piece, there is always a risk involved in long haul freight. Just like insuring your home and your car, insuring your cargo helps protect your investment and makes good business sense.
Whether you’re looking to regularly import or export goods or you’re managing a one-off household relocation, it’s vital to seek the right freight insurance to cover you for unexpected loss or damage.
Why You Need to Insure Your Cargo
When it comes to your business, it makes sense to insure against risk. If your business is heavily reliant on importing or exporting goods, the risks of loss and damage during transit cannot be ignored. That’s why you need to insure your cargo, even if you feel the risk is low.
Freight insurance will generally cover most modes of transport, including sea, air and land. While the terms and conditions of cover will vary, freight insurance will generally protect against loss or damage due to the following:
● Overturning or derailment during land transportation
● Stranding, grounding, sinking or capsizing
● Loss overboard during loading or unloading
● Washing overboard, if cargo is on deck
● Seawater damage
● Jettison
● Fire or explosion
● Malicious damage
● Theft or pilferage
Types of Freight Insurance
Single transit insurance covers a one-off nominated shipment. If you’re moving back from overseas or arranging for the transport of a large item, single transit insurance is sufficient to protect yourself from potential loss or damage.
Annual transit insurance provides ongoing cover for multiple transits. Ideal for business owners looking to import goods on a regular basis, annual transit insurance is a more cost-effective option for ongoing importers.
Freight forwarder and logistics liability insurance is for customs brokers and freight forwarders. It protects their business from the day-to-day risk posed by their activities, however, it doesn’t cover importers using their services.
Carriers load insurance is for transport operators to cover any potential loss and/or damage to third party goods. Again, this insurance is not enough to cover importers seeking to protect their goods while in transit.
It’s vital that importers never assume their goods are automatically covered by freight forwarders or transport operators during transit. Always confirm insurance arrangements directly with your chosen logistics provider before proceeding.
Restrictions on Freight Insurance
As with all insurance policies, there are restrictions that importers should understand before taking out a policy. These restrictions may apply to the location where goods are coming from or transiting through; the types of goods being transported, or the mode of transport being used.
For example, insurance cover may not be available for certain countries:
● where there are higher than normal risks of war or terrorism (e.g. Iraq and Afghanistan)
● where trade is subject to international sanctions (e.g. Iran, Syria and North Korea)
● with poor infrastructure or an unacceptable theft risk (e.g. some African countries)
Your freight insurance cover may exclude certain goods including:
● Fragile items
● Currency
● Jewellery, gemstones, precious metal and rare metals and collectables
● Electronic goods
● Antiques
● Artwork
● Drugs
● Weapons
● Explosive or dangerous goods
● Living animals or plants, refrigerated or perishable goods
The cover might also exclude certain modes of transport or specify how goods must be stored during transit to comply with the chosen policy. Make sure you read the fine print to ensure your goods will be properly covered during transit.
Securing Freight Insurance
A cargo insurance broker can help you find the best policy to meet your needs as well as assist you with any future claims. Your freight forwarder or logistics provider may also be able to point you in the direction of suitable freight insurance options.
While freight forwarders and transport operators do everything in their power to ensure your cargo arrives safely at its destination, sometimes goods can be lost or damaged along the way. That’s why importers need the right freight insurance to protect their goods and their business.
If you have any questions about freight or cargo insurance, contact PJ’s Customs for more information. Drop into our Darwin office, email us logistics@pjscustoms.com.au or give us a call on 1300 395 760 to find out more.