What Is The Difference Between Cargo And Freight Insurance?
Are you torn between choosing cargo and freight insurance? What is the difference between cargo and freight insurance?
We’re here to break down the differences between cargo and freight insurance, so you can learn the key benefits, who should use them, and more. Let’s dive in.
What Is The Difference Between Cargo And Freight Insurance?
The main difference between cargo insurance and freight insurance is that the former covers damage to your goods, while the latter protects you against loss of revenue due to delays or cancellations on a shipment.
Cargo insurance is typically purchased by shippers (i.e., companies shipping their own products) who want to protect themselves from liability if their shipments are damaged in transit.
However, if you’re an importer, it’s more likely that you’ll be purchasing freight insurance since you won’t have any control over how your goods arrive at their destination.
Cargo Vs. Freight: Which One Should You Choose?
If you’re a business owner who needs to ship large quantities of goods, then you should consider buying cargo insurance.
This type of coverage can help you protect yourself from potential liabilities that may arise from damages incurred during transport.
However, you might be better off with freight insurance if you’re a small-to-medium-sized company looking for protection against lost revenues due to transportation problems.
In this case, you’ll need to pay attention to the terms and conditions of the policy before making a final decision about which one will work best for you.
What Are The Different Types Of Cargo Insurance Coverage?
There are two types of cargo insurance policies available: physical damage and value.
Physical damage insurance covers the cost of repairing or replacing damaged items, whereas value insurance pays out when your goods are stolen or lost.
Physical Damage Insurance
This type of coverage provides compensation for property losses resulting from accidents, natural disasters, theft, vandalism, or other events.
It also includes coverage for the costs associated with cleaning up hazardous materials that spill onto the ground or into waterways.
Value Insurance
Value insurance compensates you for the loss of money and/or merchandise that occurs when your goods are stolen, damaged, or destroyed. It also helps cover the replacement costs of lost or damaged inventory.
How Much Does Cargo Insurance Cost?
Depending on the amount of coverage you choose, you could end up paying anywhere from $10 per month to upwards of $200 per year.
Some carriers offer discounts for multiple lines of insurance, so you could potentially save some cash by bundling all of your shipments under one policy.
How Do I Know Whether Or Not My Goods Will Be Insured?
Most carriers require that you purchase a certain level of coverage before they insure your goods. For example, most major carriers only provide full coverage for shipments weighing less than 10 tons.
You can find out what type of coverage you need by contacting your carrier directly. They’ll usually charge you a premium based on the weight of your shipment, and they may also ask you to sign a contract stating that you understand the terms of your policy.
The Importance Of Cargo Insurance
It’s easy to assume that you don’t need cargo insurance because you’re not transporting anything valuable.
However, there are still plenty of risks involved in moving your goods across the country or around the world. These include things like weather delays, road closures, and even strikes that could disrupt your delivery schedule.
It’s important to keep these risks in mind while planning your shipping strategy. For example, you can reduce them by choosing an air carrier that offers 24-hour customer service and tracking information.
Another way to minimize your exposure is to make sure that your goods meet the minimum requirements set forth by your carrier.
For example, many carriers have specific guidelines regarding how much space each item needs, whether it needs special handling, and more.
The Importance Of Freight Insurance
Freight insurance protects you against the possibility of losing or damaging your goods during transit.
This means that if something happens to your shipment, such as fire, flood, earthquake, or theft, your carrier will be responsible for covering the costs.
In addition to protecting your belongings, freight insurance can help you avoid having to pay extra charges to ship additional items.
However, if you’re using a consolidator, this is especially helpful since they often add surcharges to their rates depending on the number of packages being shipped at once.
The Benefits Of Freight Insurance
There are several benefits to purchasing freight insurance:
1. Protection Against Theft
If someone steals your goods, you won’t have to worry about trying to track down the culprit. Instead, your carrier will handle everything, including replacing any missing items.
2. Coverage for Damage During Transit
If your shipment gets damaged en route, you’ll receive compensation for the cost of repairs. This includes damage caused by accidents, natural disasters, fires, floods, storms, acts of terrorism, and other events.
3. Payment for Extra Services
Your carrier might charge you extra fees for packing, crating, refrigeration, and customs clearance services. If your carrier doesn’t cover those expenses, you’ll have to foot the bill yourself.
4. Compensation for Lost or Damaged Goods
Your carrier will compensate you for lost or damaged goods. This includes items that get stolen from your truck or container or items that arrive damaged due to factors outside of your control.
5. Legal Defense
You’ll have legal protection if you ever face a loss or damage claim lawsuit. In most cases, your carrier will provide you with a defense attorney who can represent you in court.
6. Peace of Mind
When you purchase freight insurance, you know that your goods are protected no matter what happens. This gives you peace of mind knowing that your belongings are safe and sound.
7. Flexibility
With freight insurance, you can choose which types of coverage you want. For example, some policies only protect shipments from theft or damage, but others also offer liability coverage.
8. Lower Rates
Because freight insurance covers all of the potential losses associated with shipping, you may qualify for lower rates than you would without it.
Final Thoughts
The biggest difference between cargo and freight insurance is that cargo insurance only covers your goods while they’re in transit, whereas freight insurance provides coverage for both your goods and their transportation.
So it’s important to consider these differences when choosing an insurer because they could affect your rate significantly.