Cargo transport is an essential step in every process of production and circulation of goods. However, in the process of transporting goods, businesses cannot guarantee that there will be no risks. That’s why it’s important to buy cargo insurance for your shipments.
Cargo insurance is a form of insurance against external risks that may cause loss or damage to the insured goods occurring during the transportation process (or temporary storage during transportation) that is carried out by any means of transport within the territory of Vietnam or on a worldwide scale.
External risks can come unexpectedly at any moment. Any transportation of goods from one place to another always contains risks such as damage to goods, natural disasters, thievery, etc. that cause partial or complete loss of a shipment (by pirates, for example). In fact, insurance cannot prevent the occurrence of risks, but can only minimize losses when an unfortunate incident occurs.
Businesses should buy cargo insurance for its important role. Based on its name and definitiont, cargo insurance serves two main purposes: prevention and limitation of loss, and risk compensation.
Risk compensation: This is the main purpose of insurance, which is to compensate financially to overcome the consequences of risks, to ensure the maintenance of production and business activities, and to ensure the interests of insurance customers against the risks of loss caused by random disasters that humans cannot control, such as natural disasters, political instability, etc.
Prevention and limitation of loss: Insurance prescribes rules, obliging the insured to take reasonable and necessary measures to prevent and limit loss. Only then will the loss be compensated.
Although cargo insurance cannot prevent risks from occurring, insurance companies can catalog common incidents in cargo transportation and then offer appropriate insurance packages so that timely solutions can be taken when risks arise, ensuring the limitation of negative impacts. That’s why it’s important to purchase cargo insurance.
Businesses can buy cargo insurance for the following 2 types of transportation:
Inland cargo insurance
This insurance is for the domestic transportation of goods. Inland cargo insurance is usually purchased for long-distance transportation and goods of great value.
Import and export cargo insurance
This type of insurance helps to fulfill the insurance company’s commitment to indemnify for the goods if unfortunately the goods encounter damage, loss, or risks during transportation. The goods are insured during sea, land, rail and air transportation worldwide. Specifically:
. Insurance for goods imported and exported by sea
- Insurance for goods imported and exported by rail
- Insurance for goods imported and exported by road
- Insurance for import and export goods by air
The benefits when purchasing cargo insurance for businesses are:
- Compensation for loss in the form of insurance money if the occurrence is valid.
- Advised on ways to prevent common risks in the process of transporting goods.
- Helping businesses feel more secure when transporting goods over long distances, where geographical and natural conditions are unusual.
- Having risks and complaints assessed, managed, and compensated by experienced professionals.
Damaging and loss of goods can badly affect a business’s operations and finances. Purchasing cargo insurance can help avert some of the unwanted outcomes.
Insurance coverage
All goods when transported in any form, any means of transport; from land, water to rail or air are covered by cargo insurance.
During the transportation of goods, if an incident occurs beyond the control of the owner of the goods, they are to be covered in the condition that the goods owner or the shipping unit has done their best to protect the goods and limit the loss.
Insurance companies will not be liable for damage, loss or expense caused by:
. The means of transport are not capable of operation, not ensuring traffic safety.
- Bad, willful or illegal act of the insured
. Loss, damage, or expense directly attributable to delay, even if the delay is caused by a peril insured against.
- Goods damaged before the insurance is purchased.
. Cargo transported beyond the destination indicated.
. Loss, damage, or expense due to inherent defect or to the particular nature of the goods insured.
- Overloading or unloading goods not in accordance with safety standards.
- Improper packing, improper packaging, or damaged goods before loading on the means of transport.
Normal leakage, normal loss of weight or volume of cargo.
We hope this article’s explained the importance of purchasing cargo insurance in ensuring the production and circulation of goods can take place in a convenient, safe, and efficient way.