Shopping for cargo freight insurance is a crucial strategic step for any import/export business looking to stay ahead of the competition, especially for sea freight cargo, which involves a lengthy process where accidents can happen. Make sure that your goods are protected in a fully comprehensive way so that you have nothing to worry about. The problem is that marine cargo insurance may be a complex and time-consuming world.
If you want to ensure your sea freight cargo is shipped from China safely, you will need to consider many factors. Purchasing insurance for cargo is a key part of the process and will ensure you have adequate protection.
Foresmart’s experts can help you find the right policy for your individual needs. We have also compiled a detailed article that will talk you through all the basics. This will give you a much better idea of what you need to do and why you need to do it. Let’s dive right in and see what needs to be done.
Do you actually need marine cargo insurance?
Running a business is all about making sure your costs remain lean so you can stay agile. It’s tempting to push the potentially expensive world of sea freight insurance to one side for this very reason. You will feel you’re saving time and money, which will then give you more options when you want to expand other areas of your business. This way of thinking about insurance is fine…until something unexpected happens.
There is a common misconception that you will get your sea freight automatically insured simply by going with a trusted carrier. Their brand and reputation preceding them does not mean that you get automatic coverage for every eventuality — far from it. In fact, understanding the true marine cargo insurance requires a brief history lesson. Don’t worry, we know how busy you are running your business, so we’ll keep this brief and only focus on the key points you need to know.
When was insurance invented?
The 1893 Harter Act: Defined the responsibilities of shipping companies
It is said that the freight insurance was invented in 1347. But before 1893, different countries would have different rules on whether a vessel was safe to go to sea or not. The Harter Act intended to change this:
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Guidance on ship safety and unsafe ships.
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Ships had to be loaded in a safe, sensible manner.
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Standard safety procedures are designed to protect everyone.
There was, however, a long list of exemptions that removed shipping companies from liability. The list is lengthy and we appreciate you have a business to run, so here are the key takeaway points:
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Shipping companies were not responsible for losses because of errors made by their crew, fires, acts of war, extreme weather events, or terrorism.
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Shipping companies were also exempt from losses because of quarantine, seizure of goods, riots, civil unrest, or strike action.
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Shipping companies would not have to pay their customers if they failed to spot obvious defects in goods, even because of clear negligence.
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Shipping companies wouldn’t even have to reimburse clients for breakages because of insufficient packaging.
This required a second piece of legislation.
The 1936 Carriage of Goods by Sea Act: Liability in US waters limited to $500 per package
Even though this act focuses on the US, there are similar arrangements in countries all over the world. It is natural to be overwhelmed by the complex nature of the marine cargo insurance industry and want to look for help elsewhere. Our experts can point you in the right direction (more on that shortly) so that you have everything you need.
Is my sea freight automatically insured?
Your sea freight is not automatically insured. This is a complex area of cargo freight insurance. There is coverage for all packages you send, but it varies depending on where you are in the world and who you ship with. We know this answer sounds rather vague, and we know that this is an issue. Our point is that the world of marine cargo insurance is highly complex and requires expert input and careful thought. Getting it right allows your business to thrive in the right way.
Googling “insure my sea freight” will provide many confusing answers, including the general average. This is the shipping insurance where the carrier will average the cost of all the cargo onboard the ship. The problem here is that your cargo could be worth substantially more than the average. If you are shipping tablet computers and everyone else is shipping budget clothes, you will not have adequate protection.
Getting surviving sea cargo released with a general average arrangement is also difficult. Carriers want protection — they are businesses after all — and so they need security as well. You must post a bond payment to get your surviving cargo released. This can be a time-consuming process if your cargo is in a port on the other side of the world. You may not even speak the same language as the people you need to deal with. Our maritime insurance experts will talk you through everything you need to know and connect you with the right people.
Now you know you need insurance, we need to see how much it costs.
What’s the cost of marine cargo insurance?
One issue with cargo insurance cost is that it will vary widely depending on what you will ship. This makes sense when you consider a more everyday example. Insuring your home’s contents will cost more if you have more valuables. The same is true when you want to insure your maritime cargo the right way.
Getting a quote for ocean cargo insurance is simple when you know who to speak to. You may wonder how much cargo insurance is. At Foresmart, you should at least spend 0.3% of the cargo value on insurance, with a minimum of only $20. If you have any questions, you can contact our team (details near the end of this article) for input and advice. The people we connect you with will outline the full sea freight cost, including shipping insurance.
To get a marine cargo insurance quotation, you will need to provide information regarding:
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What type of goods you are shipping and how much do you have
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The true value of the goods to calculate your premium
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Where your goods are coming from and where they are being shipped to
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The names and contact details of all carriers used in the shipping process
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Which types of freight you are using, not just sea freight for the main part of the journey
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Who packages your shipments and what steps to protect your items are being taken
Interestingly, you will also have to provide a loss history sometimes. This is when you highlight previous arrangements you have made which were unsuccessful in protecting your goods. Just like a speeding ticket will raise your car insurance, a poor shipment raises commercial cargo insurance here.
We think this is a clear example of how a standardized, robust approach really makes a difference. Getting the basics right from day one will lower your marine cargo insurance premiums and boost your margins when you want to operate your business the right way. If you would like to do this, we are always happy to take care of the finer points.
How do I customize my marine cargo insurance policy?
You can customize maritime insurance arrangements by connecting with shipping experts like Foresmart. We will then recommend the ideal marine cargo insurance partner for your specific needs.
Do not think that your sea freight cargo is automatically insured when you can confirm everything with an expert. The right partner will insure freight shipped from China quickly and easily in a fully customized manner. For example, if you are shipping food, you have to consider perishable product shipping insurance.
Here are some common arrangements importers and exporters make:
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Expand the freight insurance coverage to cover the initial land-based pickup from the manufacturer.
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End the freight insurance coverage at the destination, even if it is another land-based storage facility.
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Cover all modes of transport in the chain, not just the part where the ship is in the water.
Accidents and unforeseen events can happen at any stage of the journey. Getting insured for every step on the road is the smart move to make.
What types of marine cargo insurance are there?
When you get a quote for ocean freight insurance, you see that there are two main types:
- Single Shipment Coverage
A one-off arrangement for a one-off shipment — this keeps the marine freight insurance cost by stopping you from being locked in.
- Open Cargo Coverage
A form of blanket coverage for all shipments of a certain type shipped within a pre-agreed timeframe.
If you don’t know which marine cargo insurance coverage to choose, our experts will connect you with the best marine cargo insurance companies who can advise you on the best approach. If in doubt, it is always worth connecting with an industry expert.
Who will insure my sea freight fast?
Speaking directly with an expert is far more efficient than Googling “shipment insurance” and trying to make sense of the results.
The recommended approach is to connect with the Foresmart team to see our list of recommended marine cargo insurers. Your insurer will ask questions about the shipping chain and packaging standards you are using. The good news is that we can take care of all of this for you without delay.
Please ask our team anything, and we will happily provide the information you need. We can help with all aspects of finding the right insurer, whether for sea freight, air freight, or rail freight cargo. We can also help with all the wider administrative and logistical issues you have when you want to build a business that works on every level.
Frequently Asked Questions
What is cargo insurance?
Cargo insurance can cover your loss if your goods are damaged during transit. To apply for cargo insurance, you will need to connect with an expert. Doing it alone is a surefire way to get something missed. A DIY approach will also increase the chances of paying over the odds for your insurance.
Isn’t my sea freight automatically insured?
Unfortunately, life is not that simple. International waters, complex supply chains, and overlapping jurisdictions all complicate the picture. We don’t think it is ever worth taking a chance when you can so easily insure yourself against risk. Contacting our experts for help with the full cost of marine and cargo insurance is the first step to take.
Can I get a quote for marine cargo insurance from Foresmart?
Absolutely. We can also help with all of your wider freight handling needs.
