Cargo Insurance Certificate
What is Cargo Insurance?
A document indicating the type and
amount of insurance coverage in force on a particular shipment. Used to assure the consignee that insurance is provided to cover loss of or
damage to the cargo while in transit. In some cases a shipper may issue a document that certified that a shipment has been insured under a given open policy, and that the
certificate represents and takes the place of such open policy, the provisions
of which are controlling.
Because of the objections that an instrument of this
kind did not constitute a “policy” within the requirement of letters of credit,
it has become the practice to use a special marine policy. A special marine policy makes no difference to an open
policy and stands on its own feet as an obligation of the underwriting company.
Also called insurance certificate and special cargo policy.
Insurance
certificates usually include the following information:
- Conditions of the insurance coverage
- Shipping information
- Additional/special conditions of coverage
- Instructions or actions to be taken in the event of lost or damaged cargo
- Settlement agent contact information
- Liability of carriers, bailees, or other third parties
Types of Cargo Insurance
Cargo insurance can be taken for international as well as domestic
transportation. At the same time, this is really difficult to standardize and
control without the proper cooperation from countries and states due to the
varying nature of this insurance. Under these variations, this insurance can be
categorized into following classifications
Land Cargo Insurance :
This insurance provides coverage for all
the land transportation's covering trucks and other small utility vehicles. The
coverage aspects are theft, collusion damages and other related risks. This
insurance is domestic in nature and normally, operates within the boundaries of
the nation.
Marine Cargo Insurance :
This insurance covers transportation
carried our either in sea or by air. Here, means of transportation and goods
are covered from damage due to cargo loading/unloading, weather contingencies,
piracies and other relevant issues. Mostly, this insurance covers international
transportation. Under these insurances, there are some policies
which can help you in understanding the concept of cargo insurance in a
profound manner.
These policies are:-
Open Cover Cargo Policies:
When insurance holder opts for
coverage against various consignments, then open cover cargo policies get
activated. These policies are segmented in two categories namely renewable
policy and permanent policy. Renewable policy is required for a particular
value requiring renewal after policy expiration. Most of the single trip or
voyages fall under this category. Permanent policy can be drawn up for a
decided time period permitting countless shipments in that period.
Specific Cargo Policies:
When a company approaches an
insurance company or broker for insuring a particular consignment, then it can
fall under the category of specific cargo policies. These policies are also
termed as voyage policies because only shipments are covered under them.
Contingency Insurance Policy :
There are certain cases where customer,
not the seller is responsible for insuring the goods against loss or damage.
There are perils associated with it if goods get damaged during transit and
customer refuses to accept them. In few cases, some customers do not insure the
goods and tend to avoid the liability. Under such circumstances, affected
sellers can seek rectification with the help of the legal system. This can be
very costly for them and sometimes, they may lose the case. Therefore, sellers
are advised to go for contingency insurance which have a very less premium
rate. For testing and verification, sellers need not tell about it to their
customers.
Benefits of Cargo Insurance
Cargo insurance covers transits carried out
in water, air, road, rail, registered post parcel and courier. Following
aspects are covered under the benefits of this insurance:
This coverage provides extensive protection
against damage or loss due to external factors. Though, this is called all risk
coverage but still, people should know the aspects included and excluded in the
policy. Under all risk coverage, included aspects are:
- Damages due to inappropriate packing
- Infestation
- Cargo abandonment
- Customs rejection
- Employee’s dishonesty
“Free of particular average” coverage
clause excludes coverage partial losses to the cargo or to the hull except
those resulting from stranding, sinking, burning, or collision. Another important
aspect of this clause is that the shipper does not pay for minor losses
(pre-decided percentage) and is only held liable in case of significant losses
to the cargo. This insurance coverage belongs to special category and covers
particular perils only. There is difference in coverage depending upon the
storage location of the cargo.
In this policy, following perils are included:-
- Collision
- Heavy weather
- Sinking
- Derailment
- Non-delivery
- Theft
- Fire
- Earthquake
This coverage is basic requirement in the
marine cargo transits. More specifically, it covers only partial loss occurred
to the shipment. It requires all the other cargo holding owners on the ship to
pay compensation to the periled cargo owner.
This coverage is applicable when shipment
is unloaded from the ship and it gets transported to the customer’s warehouse.
Insurance companies are very particular about compensating only the insurance
holder’s cargo, not other owners’ cargo.
Written By
-Gazi Sanaul Hasan
Thanks for sharing your expertise and information with us. It helped me understand and gain an insight into the topic of home loan insurance
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