What is cargo insurance and when do you need it?
Understand the general principles, what the most common risks associated with goods transport are, and when it makes sense to arrange for cargo insurance.
Incoterms and liability
The carrier or freight forwarder is only liable if damage or loss occurs through demonstrable mistakes or negligence during transport. Likewise, there are limits to the extent of carriers’ or freight forwarders’ liability and to the maximum amount of compensation they are required to pay.
Carriers and freight forwarders
|Modes of transport
|SDR 19 per kg
SDR 666.67 per package or SDR 2 kg if that is more
|Road transport (international)
|SDR 8.33 per kg
Cargo insurance cover
If the value of your consignment is higher than the maximum amount your carrier or freight forwarder is liable for, it is wise to ask about cargo or transport insurance.
- the value and nature of the goods
- the destination
- the selected mode of transport
Risks and measures
Filing claims for damage, loss or theft
When opinions differ
Always collate all the relevant documentation such as bills of lading and transport agreements. These documents indicate the condition and the content of the consignment at the moment the carrier received it.
Weighing cost and benefit
Insurance is money well spent, because it is rare for a consignment to have a value lower than the amount the carrier or freight forwarder is liable for.