Cargo insurance for shipping overland and overseas represents one of the most important considerations when shipping a vehicle or vehicles to an overseas market for sale. The reason insurance is best thought of as the foundation for an importing/exporting venture rests in the potential risk of cargo being damaged in transit.
Choosing your Coverage
Just as the case for shipping any other type of cargo, insurance provides a way to offset the financial risk of damaging valuable goods. Damaged goods usually cannot be sold, or can only be sold at a reduced value. For a vehicle damaged in transit, even minor cosmetic damage can make a vehicle unsellable without costly repairs. Therefore, purchasing adequate coverage to offset the risk of damage can insulate a seller from having to declare a loss before their vehicle makes it to market.
When purchasing vehicles for export, there cargo insurance can cover damage to a vehicle in transit from the point of sale (the auction house) to the port. A general cargo insurance policy with the appropriate policy terms will cover a vehicle in transit on land and sea. Marine cargo insurance will cover damage to a vehicle while in the port or at sea.
Coverage While Being Shipped on Land
Normally, auto transport companies must carry insurance to do business. However, it is possible that the insurance coverage included with the shipping charges will not be sufficient to cover all damage. Best practices dictate reviewing the scope of coverage to find any gaps in coverage.
Often, a shipper’s insurance will cover the entire car or provide only coverage for certain parts. Lastly, it is important to become acquainted with the deductibles contained in the policy. If any of the provisions of the policy seem unreasonable or do not provide adequate coverage, it may be necessary to purchase additional coverage.
Marine Cargo Insurance
When shipping overseas, marine cargo insurance can offset the risk presented by physical damage, loss or theft of a vehicle while in overseas transit. Policies can be purchased from brokers who specialize in this type of coverage.
There are two standard types of marine cargo insurance:
- All-Risk: This type of policy covers full or partial losses to the items shipped that are caused by external forces while in transit. They cover almost every type of loss except for those that are specifically excluded.
- Free of particular average (FPA): This coverage is often referred to as “Total Loss Coverage” or “Named Peril Coverage.” It will only cover losses specified in the policy. While most shippers will secure an all-risk cargo policy, there may be certain commodities or risks that the underwriter is not willing to provide all-risk coverage for, so FPA coverage is an alternative.
All-risk cargo insurance exclusions fall into the following categories:
- Warehouse storage coverage
- Domestic inland transit coverage
- War risk coverage
- Strikes, riots, and civil commotion (SR&CC) coverage
- Concealed damage coverage
- Contingency coverage
Exclusions that cannot be covered, even by endorsement:
- Delay, loss of market
- Improper packaging by shipper
- Consequential loss
- Employee dishonesty
In addition to considerations related to the specific terms of an insurance policy, a growing list of countries has enacted barriers to the free placement of cargo insurance. The American Institute of Marine Underwriters publishes periodically for its members a list, by country, of restrictive marine insurance practices.
Reviewing Policy Terms
Given the number and different combinations available in a cargo insurance policy, it is important to review the policy terms and verify insurance risks and business needs are covered by the policy. Leaving yourself undercovered can cause unnecessary exposure to risk if a vehicle is damaged in transit. Over-coverage or using redundant coverage can be equally as bad if the cost of insurance will detract from other spending or reduce the return on investment.
As in the case of any insurance purchasing decision, it is advisable to consult with third-party sources who can provide tips for avoiding common cargo insurance traps and can offer practical advice on how to proceed, particularly for those unfamiliar with cargo shipping. Most importantly of all, educate yourself as a consumer by shopping for the best combination of price and coverage by getting multiple quotes for insurance.
Major Cargo Insurance Carriers
The following list includes some of the major cargo insurance carriers:
- Wyvern International Insurance Brokers
Wyvern International provides insurance for cargo that passes through oceans as a part of international trade. Under their insurance policy, they will cover all the damages and losses made to the shipment and save the exporter and importer from the loss of their cargo.
- AIG Cargo Insurance
AIG Cargo keeps track of your cargo at every step so that your cargo doesn’t get lost in between all the traveling distance or fall under any harm due to poor handling.
- ACE Insured
ACE Insured provides marine cargo insurance throughout the world. ACE is at the top of their game in insurance. They have been involved in the business for many years and have provided all kinds of solutions to problems caused by making international or domestic trades.
- Universal Cargo Management
Universal Cargo Management provides cargo insurance for freight and air-freights only. This insurance will cover any damage or loss of cargo while in transit between the original location and the destined location. This is recommended more for people who are involved in shipments made as a part of their business trades.
- Bellwood Prestbury
Bellwood Prestbury is an international cargo insurance company that provides full protection of your cargo in any part of the world. They have a worldwide coverage of goods that are being shipped through shipment companies by road, rail, or even boat. They also provide cargo insurance through the most dangerous parts of the world, such as areas that include war, terrorism, hazards, etc.