Cargo Insurance

Cargo Insurance

In late 2020, The World Shipping Council released a report stating that from 2008 – 2020, an average of 1,382 containers are lost at sea each year. Just in the months of December ‘20 and January ‘21, almost 3,000 containers were lost in the Pacific Ocean due to inclement weather situations. Hundreds of millions of dollars were lost at sea, and the rest of the cargo was delayed for months. With the formation of the 3 major alliances, more cargo is being placed on bigger boats, decreasing the amount of total sailings. While the overall risk of an accident is still small, we believe that more cargo on less boats is an equation for higher risk. Could your company recover if you lost 1 or more containers of product on a single vessel?

Bow of docked cargo ship at dusk

Cargo insurance is a mechanism that will mitigate your company’s exposure to financial loss. Depending on your needs, a policy can be shipment specific, or cover potential losses and damages to freight across all modes for all your shipments. Whatever your shipment profile, maintaining a comprehensive cargo insurance policy is one of the most important things you can do to protect your company’s interests.

Do the carriers hold any responsibility to lost cargo?

Various Acts and Agreements exist for defining a carrier’s limitations of liability for both International and Domestic shipments. For an international ocean shipment, the Carriage of Goods by Sea Act limits a carrier’s liability to only $500 per package. “Per package” has been defined in many courts to mean a full container. The Warsaw Convention currently limits an air carrier’s liability to only $30USD per KG, and likewise the ICC Termination Act and the Harter Act discuss domestic carriers’ limits of liability that are as low as only $100 per shipment. We believe your cargo is worth substantially more than these limits, and can help make sure you are fully covered in the event of damage or total loss. Additionally, most insurance claims pay out within 30 days, whereas claims against carriers can take months, if not longer, for very limited payback. Contact Transmodal today to discuss your cargo insurance options.

Man in hardhat and coveralls guides a large box as it is unloaded by crane

What is General Average?

General Average is the concept that cargo owners will share the losses of a few to save the many. In the event that cargo is intentionally jettisoned or dumped in order to save the vessel, lives and remaining cargo from otherwise certain loss, the cargo owners whose freight was dumped are reimbursed by the cargo owners whose freight remained intact. For those cargo owners who did not lose freight, often times the cargo will not be released until their “share” is settled, which could be tens of thousands of dollars. Maintaining an All-Risk cargo insurance policy will allow your firm’s cargo to be released right away. Transmodal representatives are standing by to answer any questions.

While obtaining cargo insurance is not a requirement, it will mitigate your company against damage, total loss, theft, and General Average. We can offer a variety of flexible insurance policies on a per-shipment basis, or structure a policy to cover your annual shipping needs across all modes of transportation. If you are looking for a low or no deductible policy, Transmodal can cater your All-Risk policy to suit your needs. And, with programs backed by industry leaders like Lloyd’s, AIG and Cigna, you can rest assured your firm will be secured by the most trusted providers in the business.

Contact Transmodal today to get answers to your questions, and to discuss Cargo Insurance options for your freight shipments.