Freight forwarders manage various aspects of the shipping process and thus play a crucial role in the shipping industry. Though freight forwarders do not own the goods that are being shipped, they can still be held legally responsible for the losses or damages to shipment. Hence, freight forwarders need to have financial protection against such liabilities by availing the freight cargo insurance.
What is freight cargo insurance?
Freight cargo insurance is a type of marine insurance policy that protects the shipment of goods against various specified and unspecified risks during the shipping process. It covers the financial loss or damage caused to the cargo or shipment while it’s being transported from one place to another. This coverage can be availed for goods being transported by various modes such as road, waterways, rail, or air.
Freight cargo insurance can be availed by anyone involved in the shipping process. This includes shippers, transport carriers, cargo freight forwarders, and logistic providers. Depending on the cargo type such as air cargo and land cargo, types of forwarding freight services also vary. There are air freight forwarders, sea freight forwarders, road freight forwarders, rail freight forwarders and multi-modal freight forwarders. Irrespective of the type, everyone can avail the freight cargo insurance.
Importance of freight cargo insurance for air freight forwarders
In the shipping industry, every party involved needs to safeguard the cargo through enhanced shipment protection. Hence, availing the freight cargo insurance is crucial for everyone involved in the shipping process including freight forwarders. Let us understand the reasons that make freight cargo insurance important for air freight forwarders:
- Freight forwarders can be held liable for the loss or damage to the cargo that is in transit. The insurance policy can provide financial protection against such liabilities.
- The cargo insurance policy helps to manage financial risks associated with unforeseen events during the transit of cargo. This includes loss or damage to cargo arising from natural disasters, theft, transport delay, etc.
- In many regions, cargo insurance can be a compliance requirement. Hence, air freight forwarders would require the coverage to adhere to legal compliance.
- Having insurance protection gives a competitive edge to the freight forwarders as the client would prefer this additional service that enhances shipment protection.
- Lastly, offering insurance protection shows the commitment of freight forwarders toward the protection of clients’ interests.
Freight cargo insurance tips for air freight forwarders
The following are the important tips that can be useful while you avail freight insurance:
Assessment of risk and customisation
Before purchasing it is important to assess the risk involved with different types of cargo. This can help in identifying the coverage requirement suitable based on the destination, nature of the cargo, and potential risks involved. Accordingly, the coverage can be customised for the client.
Avail comprehensive coverage
Freight cargo insurance comes in different types – all-risk cover, specific peril cover, and general average cover. The coverage varies based on the type chosen. Hence, it is important to ensure the comprehensive coverage that caters to your needs.
Choose the right insurer
Choose to avail of the policy from a well-established insurance provider who specialises in cargo insurance. Ensure they have a strong reputation for claim settlement and customer service.
Complete documentation
Submit all the relevant details as per the regulations and the requirements of the insurance provider. Proper documentation with accurate details is extremely crucial.
Maintain transparency
It is important to maintain transparency with your client by sharing the details of the policy, extent of coverage, limitations, and policy exclusions. Make sure they understand what is covered and what isn’t under the cargo insurance policy.
Extent claim assistance support
It is important to provide the resources and assistance to handle claims. Assist clients in the claims process by providing necessary documentation and acting as a liaison between the client and the insurance provider.
Conclusion
To sum up, freight cargo insurance plays a crucial role in enhancing shipment protection. Freight forwarders can enhance their reliability and credibility in the shipping business by availing of comprehensive cargo insurance coverage to safeguard their client’s shipments. They can protect their business interests, ensure client satisfaction, and manage the inherent risks involved in the shipping process.
About The Author
Simran
MBA Insurance and Risk
With extensive experience in the insurance industry, Simran is a seasoned writer specializing in articles on marine insurance for SecureNow. Drawing from 5 years of expertise in the field, she possesses a comprehensive understanding of the complexities and nuances of marine insurance policies. Her articles offer valuable insights into various aspects of marine insurance, including cargo protection, hull insurance, and liability coverage for marine-related risks. Renowned for their insightful analysis and informative content, Simran is committed to providing readers with actionable information that helps them navigate the intricacies of marine insurance with confidence.
