Dangers of Not Having Marine Cargo Insurance
What Your Risk Without Shipping Insurance
Shipping insurance is there to protect you when the unexpected happens. Most importantly, good freight insurance is there to limit your loss when something goes badly wrong.
Most people think that if the cargo is damaged or lost, then a simple call to the insurance company will fix the problem. Unfortunately, in most cases, things are not that simple.
The Real Costs of Avoiding Freight Insurance
If something bad happens and the cargo is not insured, then the shipper stands to lose the value of the sale – including any profit.
And what if the cargo is considered damaged or faulty? A protracted argument could ensue leaving all parties with a bad taste in their mouth. If not handled well, this can lead to the business relationship faltering between the buyer and seller. A hard-earned customer gone in a flash!
There is another situation not often considered by less experienced shippers. What if the vessel itself suffers damage or loss from something like a fire or rough weather? This can lead to the shipping company calling “general average”. This means that all the cargo owners will have to pay a percentage of the costs of this damage and/or loss! Basically, as the shipper, you can end up covering the cost of repairs to the ship.
Furthermore, what if it’s something as seemingly simple as the cargo being abandoned at the destination? Or some sort of government embargo or some other unforeseen occurrence? As the shipper, you are liable for all costs up until the consignee takes responsibility for the shipment.
This can involve covering all holding costs, inspection fees, and even disposal costs if the cargo is not claimed. Will you be happy paying for shipping charges that otherwise would and should have been paid by your customer, whilst not getting paid at all for your export invoice?
Don’t Take the Risk
Our advice – don’t skimp on your freight insurance and leave yourself or your business open to any surprises.
Always read the terms and conditions of any shipping line/freight forwarder/transport company/Customs Broker. Know the responsibilities of any other stakeholders/suppliers in your supply chain that you deal with. Make sure that your insurance covers you for even the most unlikely of scenarios.
Freight insurance is only one of the issues typically overlooked when businesses search for (supposedly) cheap freight. There are many other associated risks of cheap freight worth considering before you choose a shipping company or freight forwarder. Know what you are paying for in advance and you won’t be unpleasantly surprised.