Cargo-Insurance-Definition

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Insurance and Certificates Required

Cargo Insurance Definition

Beware of unlicensed and insured movers

Cargo insurance provides coverage against physical damage or loss of goods during shipping, whether by land, sea or air. Because of the many dangers inherent in shipping, most individuals and businesses choose to insure their goods while they are in transit. However, many different types of cargo insurance are available and it is important that you know exactly what you want before taking the insurance, or you may find yourself not covered for every eventuality.

Is Insurance Necessary?

Insurance is necessary because of various laws that limit the liability of carriers. For example, the Hague/COGSA Act limits the liability of shipowners to $500 per unit, and also relieves shipowners of all liability in the event of one of 17 events occurring. These include war, acts of God, strikes, riots, acts of the pilot or crew and attempts to save life at sea. For air carriers, the Warsaw Convention limits liability to $9.07 per lb. for international shipments and just $0.50 per lb. for domestic shipments. To recover his full loss, a shipper must insure his cargo.

Protection required under the Motor Carrier Act of 1935. The policy covers the motor truck carrier if it is legally liable for the damage, destruction, or other loss of the customer's property being shipped. This includes lost packages, broken contents, and stolen articles. Two types of policies are available: (1) those that list the specific trucks to be covered in which the property may be damaged or destroyed; and (2) those that cover all of the insured's trucks, with no trucks listed specifically. This coverage is on the Gross Receipts Form, which in essence covers all operations of a motor carrier.

Example of Cargo Insurance