Cargo insurance: The safe arrival of the cargo at its destination is very important not only for the original owner of the cargo, but also for the transport company. Of course, it is not only the cargo that must reach its destination safely; Rather, not harming people and the means of transportation should also be taken into consideration. Anyway, the incident does not make news. No matter how careful you are, there are still incidents lurking in the transport.
Fortunately, the amount of damage can be reduced to a minimum with freight insurance. In fact, cargo insurance is very important for those who work in the field of goods transportation or want to enter. But what is this insurance policy, what are its types and why should you buy it? Stay with us to know the answers to these questions.
What is cargo insurance?
In the beginning, what is probably the case with services such as freight insurance? What are the types of freight insurance and the benefits of freight insurance? How is bill of lading insurance different from freight insurance? you face For this reason, before anything else, we will explain the freight insurance to you.
Cargo insurance or transport insurance is a contract between the transport company and the owner of the goods with the insurer, whereby the insurer undertakes to compensate for the damages in case of damage to property and third parties in exchange for receiving an amount from the insurer.
In fact, during the transfer of the goods from the origin to the destination, if there is any damage to it or if the insurer incurs costs, the damage will be paid by the insurer based on the provisions of the insurance policy.
Cargo insurance specialized terms
Before we want to examine the details of cargo insurance, it is better to first familiarize ourselves with the terms of this insurance policy. Terms that you will encounter many times in all types of transportation insurance. These terms include the following:
universal language:
It is one of the important principles of seafaring, and based on these principles, in a sea voyage, all the people involved, in case of voluntary damage to the ship or goods to save from emergency materials, share in their proportion.
Reinsurance:
It is an assignment contract in which the insurer entrusts part of its obligations in excess of its financial and technical capacity to another insurance company; In other words, it provides insurance.
bill of lading:
In fact, it is a security in which the insurance and transportation institute, information such as:
- name
- The address of the recipient and the sender of the goods
- Specifications, quantity and weight of goods
- The amount of freight is written. The bill of lading is the same as the contract of carriage, the receipt of the goods and the document of ownership.
Total Loss:
This insurance policy is valid until reaching the entrance of the destination country and includes its loss at one stage due to fire, sinking or plane crash.
Insured value:
In the absence of a specific agreement between the insurer and the insurer, the value of the insurance policy will include: the sum of the purchase price of the goods, the cost of transportation and non-profit.
non-profit:
What is non-profit in cargo insurance? Non-profit is issued for various insurance policies, one of which is the cargo insurance policy. In cargo insurance, there are conditions that may cause collateral damage in addition to the main damage.
When a cargo is damaged, not only the damage to the cargo should be compensated, but also the damages caused by the delay in the transportation of the cargo. The conditions of freight insurance are such that the amount of non-profit is equal to 10% of the sum of the purchase price of the goods and its transportation cost; Of course, if no other agreement has been reached in this regard.
Part shipment:
Part shipment is a condition in cargo insurance that the insurer declares his agreement or non-agreement to carry the cargo repeatedly and in several stages from the origin to the destination.
Transshipment:
Transshipment is the transfer of goods from one vehicle to another vehicle. this type of transportation is more common in combined transportation, where various vehicles such as ships, airplanes, trains, trucks, trailers, and other vehicles are used to send goods to their destination.
FOB:
This term is also called delivery on board and in fact it means the price until the moment of delivery on the ship. In this way, the seller must pay the cost of the goods to the original shipping location. The rest of the costs, including freight, insurance, etc., are the responsibility of the buyer. This issue is based on international laws.
Cross Stuffing:
Cross-staff is known as one of the most widely applied methods of sea transportation. This method is used when there is no direct shipping line from the source to the destination or the seller of the goods insists on delivering the purchased goods in a country other than the origin country, in this case, the cargo is shipped by two different shipping lines from the origin to a third country and from there to the destination.
Barratry:
An act committed by the captain, sailor and staff intentionally or unintentionally and causing damage to the ship and goods is called Barratry in cargo insurance.
Types of freight insurance
The types of cargo insurance are divided into several categories as follows:
- Geographical scope
- Type of transport
- Based on coverage
Now, we will continue to explain the types of freight and transportation insurance in each sub-branch.
Types of cargo insurance according to geographical area
Import transportation and cargo insurance:
This mandatory insurance policy is for importers of goods and in fact for individuals or companies who intend to buy goods from foreign countries. Of course, a purchase in the form of a bill of exchange, without currency transfer or letter of credit.
Export transportation and freight insurance:
But what is meant by cargo insurance in the export sector? According to this policy, import goods insurance is used for products and goods that are exported from Iran to other countries by any method. According to export goods transportation insurance, such cases are covered by cargo insurance.
Transit freight insurance:
In this insurance policy, Asian countries are only on the way of transporting goods. In other words, the origin and destination are other countries. In this type, the rate and conditions of export insurance are used. It is also necessary to have a freight and transportation insurance license.
Domestic freight insurance:
This insurance policy is valid only within the borders of the country and all the goods that are moved within the country are covered by the insurance.
Domestic cargo insurance is issued in the following three ways:
- General insurance policy: In those main conditions, the legal provisions and obligations of the parties as well as the insurance capital are determined. In addition, it is agreed that the capital will be valid until the end.
- Open coverage insurance policy: a certificate will be issued by the insurer every week and the amount of insurance premium will be determined according to the transported capital. Saman Insurance is one of the companies that issues such an insurance policy.
- Simple insurance policy: issued for certain goods. The insurer must know the specifications, condition and how to transport the goods he needs.
Types of freight insurance based on coverage
Cargo insurance is divided into the following categories based on the coverage, which we will explain each one below.
Total Loss insurance:
This insurance policy is also called ceremonial or customs. Based on that, if the entire load is lost during sea transportation, the insurer will pay the damage. All export goods must be covered by this insurance policy. Of course, this insurance policy is rarely used.
Insurance with conditions C:
This is the cargo insurance with the lowest amount of coverage and the cheapest cover. The risks covered by this insurance policy include the following:
- Fire or explosion
- Running aground, grounding, hitting the sea floor, sinking and overturning the ship
- Overturning or leaving the transport vehicle from the line or rail
- Collision of ship or vessel with any foreign object other than water
- Emergency unloading of goods in another port
- General loss (destroying or sacrificing goods)
- Throwing goods into the sea for lightening in critical conditions
- Public damage
- Shared responsibility in an accident
Insurance with conditions B:
This policy is between C and A. Damages covered by this clause include the following:
- All risks in Clause C
- Earthquake, volcano and lightning
- To receive goods from the deck
- Water entering the ship or vessel or cargo warehouse
- Total loss of any package on the ship or vessel
- Theft and theft
- hooking
- drowning
- oiling
- Breakage, spillage and damage caused by other goods
Insurance with conditions A:
It is the most complete insurance coverage, which, of course, has the highest premium compared to the others. of course, this insurance policy has exceptions that include the following: (these exceptions include clauses B and C)
- Intentional damages
- Damages due to wear and tear
- Damages due to inappropriate packaging
- Damages caused by problems in the goods registered in the insurance policy
- Damages due to delay
- Damages caused by the bankruptcy of owners, lessors and ship operators
- Damage caused by a nuclear explosion
- Damages caused by improper seaworthiness of the ship or vessel or its unsuitability for carrying goods
- Damages caused by war, rebellion, revolution, uprising or clashes
- Damages caused by seizure and confiscation of goods
- Damages caused by labor strikes or civil unrest
- Damages caused by terrorist operation
Non-delivery Clause:
The non-delivery clause means that if some or all of the goods are lost after being unloaded from the means of transport (mainly ships) for unknown reasons, the insurer will receive the loss by preparing a report of the non-delivery of the goods and handing it over to the insurance company. . Of course, Clause A has non-delivery coverage; But it does not exist in B and C and the insurer must pay an additional amount to purchase this coverage.
Inner cover:
This coverage covers incidents that occur within the country. The risks covered by domestic insurance are divided into two main and additional categories. The main category is present in all insurance policies and includes the following:
- fire
- Vehicle accident
- Overturning of the vehicle
- Throwing the vehicle
Additional coverages that the insurer can add to the covered items by paying a higher fee:
- Foreign body impact
- Throwing an object from the vehicle (provided it is seen by the insurer)
- Loading and unloading
- Total cargo theft with 20% deductible
Types of freight insurance based on the type of transport
The insurance policy is divided into the following four methods based on the type of transportation:
- Aerial
- Terrestrial
- Reillway
- Marine
Aerial:
The insurer undertakes to compensate the damages caused to the air shipments. In this type of insurance, up to $20 per kilogram of cargo is insured by airlines that are members of the IATA organization. For goods with insurance value, a separate insurance policy should be prepared. Of course, at the destination airport, the received shipments must be checked again for their packaging and health.
Terrestrial:
It compensates the damages caused to the goods during ground transportation. The land insurance policy is issued in three forms: responsibility of transport operators, simple and contract. In the liability insurance of transport operators, according to the commercial law, the main and responsible companies are civilly responsible for the safe delivery of the goods to their destination.
In addition to issuing the certificate, the transport company should pay the insurance premium to the company. Hence, this insurance policy will pay the damages caused to the responsibilities of the transport company.
Shipping insurance time
In general, the duration of the insurance policy will be from the time of loading until leaving the origin and until the complete unloading at the destination. Of course, in some insurance policies, it is until reaching the destination. Also, if the cargo is derailed, the cargo insurance will be canceled.
In general, the time of cargo insurance ends in the following conditions:
- As soon as the cargo is completely unloaded at the destination written in the insurance policy
- As soon as 60 days have passed since the complete unloading of the goods at the last port of unloading in sea transportation
- Getting out of the normal and defined path
- As soon as 30 days have passed since the complete unloading of any part of the goods from the plane at the destination airport
- As soon as 60 days have passed since the complete unloading of the goods to the country’s customs warehouse through ground and rail transportation
Also, the insurer has up to two years from the date of issuance of his insurance policy to carry his goods. Otherwise, the insurance policy will lose its validity. Unless otherwise agreed.
Resources: WikiPedia | InvestoPedia | Cambridge Dictionary
