The recent Baltimore bridge accident, which could cost insurers up to $3 billion, highlights the importance of adequate freight insurance. In a globalized world where freight transport is essential to business operations, protecting your assets against contingencies is crucial. This article explores everything you need to know about corporate freight insurance, its coverage and how it can safeguard your business.
What is freight insurance?
Freight insurance is a policy that covers damage, theft or loss of goods during their movement. This insurance is essential for companies that rely on the transport of goods, as it offers additional coverage beyond the insurance provided by carriers, which is usually limited by the weight of the cargo. With this insurance, the recovery of the real value of the goods is guaranteed, regardless of its weight, thus ensuring business continuity in any eventuality.
Main coverage of freight insurance
The coverage of a freight insurance is broad and can be adapted to the specific needs of each company. Below, we detail some of the main hedges:
General coverage
- Institute Cargo Clauses (ICC): These clauses are standard in maritime transport and offer three levels of coverage: A, B and C. Modality A covers all risks, while Modality B and C have more limited coverage.
- Land and air risk coverage: In addition to maritime transport, the insurance covers land and air transport, securing the goods in any means of transport.
Additional hedges
- Contingency clause: Additional protection for contingencies not covered by the standard clauses.
- Currency clause: Coverage for fluctuations in exchange rates that may affect the value of the goods.
- Fair and exhibition goods: Protection for goods exhibited at events and fairs.
- Coverage for used goods: Insures goods that are not new but still have value to the company.
- Returns to Origin: Covers the costs of returning defective or non-accepted goods.
- Brand protection: Protects the company’s reputation by protecting its products during transport.
- Removal and destruction of remnants: Costs of destroying the remnants of goods resulting from losses caused by accidents.
- Improper stowage or inadequate stowage: Loss of or physical damage to the goods resulting from stowage or misstowage pressures.
- Institute frozen food clauses: Covers any refrigerated food item excluding meat due to a breakdown in the refrigeration apparatus.
- Frozen meat clauses: Covered meat or products thereof which are chilled as a result of a breakdown in the refrigeration apparatus.
Cases where freight insurance is activated
To better understand the importance of this insurance, let’s see some practical examples:
Land transport accident
A fruit company hires an external carrier to transport its goods to an international market. During the journey, the truck is hit by a car and the fruit is scattered along the road. In this case, the freight insurance would cover the damage, ensuring that the company does not suffer significant economic losses.
Gross damage in maritime transport
Due to a strong storm, the master of a ship decides to throw several containers overboard in order to maintain the stability of the ship. This is a typical case of gross damage, where the goods sacrificed to save the ship and its cargo are covered by freight insurance, with losses being evenly distributed among all cargo owners.
Damage due to improper handling of the container
One company imports engines from an Asian country. Upon arrival, the engines are found to be rusted due to holes in the container carrying them. Freight insurance is activated to cover the damage, ensuring that the company receives adequate compensation.
How we work freight insurance at O.Brokers
At O.Brokers, we analyze each company in a comprehensive way, considering its activity, the countries where it operates and the type of goods it transports. This allows us to offer a complete and personalized coverage. Our process includes:
- Detailed analysis: We assess the specific needs of the company to design a policy that covers all possible risks.
- Ongoing advice: We offer expert advice to optimize insurance coverage, adapting to changes in our clients’ business operations.
Importance of incoterms in freight insurance
Incoterms are international trade terms that define the responsibilities of both buyer and seller in the transport of goods. These terms are crucial to determining when the freight insurance coverage begins and ends. The most common are:
- EXW (Ex Works): The seller fulfils his obligation by making the goods available to the buyer at his premises.
- FOB (Free on Board): The seller is responsible until the goods are loaded onto the ship designated by the buyer.
- CIF (Cost, Insurance and Freight): The seller covers costs, insurance and freight to the agreed destination port.
Institute charge clauses
Institute Cargo Clauses (ICC) are standard clauses used in freight insurance. There are three main types of ICC:
- ICC (A): Covers all risks except those explicitly excluded.
- ICC (B): More limited coverage, excluding certain risks such as earthquakes and volcanoes.
- ICC (C): The most basic coverage, excluding a wide range of risks.
For more details, see the page on Institute Cargo Clauses.
Conclusion and final reflection
Protect your assets and secure the future of your business with freight insurance. Reflect on the importance of being prepared for any eventuality and how proper insurance can make a difference in your business’s stability and growth. Do you have any questions or experience with freight insurance? Share your thoughts in the comments and join the conversation.
For more information on how freight insurance can protect your business, visit our pages on transport property damage insurance and insurance solutions for businesses.
In short, having adequate freight insurance is essential for the protection of your company’s assets. This insurance not only covers the most common risks, but also offers additional coverage tailored to the specific needs of each business.
How can we help you? Request a meeting for an audit of your company’s insurance and find out how we can optimize your coverage to ensure the continuity of your business operations.
