Navigating the ever-changing landscape of global trade

Why Freight insurance is no longer a luxury, but an essential tool for businesses to protect their valuable cargo, mitigate financial losses and ensure business continuity.

 

Do you know what would happen if your cargo was lost'

Typically, the industry standard is limited liability, but what does this mean' Well, should something go wrong when you’re shipping cargo, the compensation to which you’re entitled is normally calculated against a ‘limited liability clause'. A limited liability clause specifies the maximum amount the insurance company will pay for a covered loss or damage to your cargo. It sets a financial cap on the insurer's obligation, meaning they are not liable for any amount exceeding the stated limit.

Under limited liability, damaged or lost cargo is typically assessed by weight, not value. So, it’s likely, your compensation could be dramatically less than the commercial value of the goods. When no insurance is placed, and reliance is solely on the liability limit - the owner of the goods suffers an obvious shortfall.

 

You could be out of pocket for more than the value of the cargo!

Even if your goods arrived damaged or you suffer a total loss, you will still have to pay your supplier for the cargo (if ex works) and must settle the full freight costs with the shipping line or freight forwarder. If landed, you will also have to pay full duty to the destination ports government without receiving a single piece of sellable merchandise. Forget to check a box on a coverage form - or assume incorrectly that your supplier insured your shipment - and you could experience a costly loss, especially if they are shipped by sea freight.

Ultimately, understanding the limited liability clause in your cargo insurance policy is crucial for making informed decisions and ensuring adequate protection for your valuable shipments.

 

Here's why freight insurance is more important than ever:

1. Heightened Vulnerability

Geopolitical Tensions: Trade wars, sanctions and regional conflicts can disrupt supply chains, delay shipments and lead to unexpected losses.

Extreme Weather Events: Floods, hurricanes and other natural disasters can damage cargo, cause delays and incur significant financial losses.

Cyberattacks: Increased reliance on digital systems in logistics makes them vulnerable to cyberattacks, potentially jeopardizing shipments and sensitive data.

Economic Fluctuations: Market volatility can affect exchange rates, impact pricing and lead to financial losses during transportation.

 

2. Protecting Your Financial Stability:

Cargo Coverage: Freight insurance safeguards your goods against physical damage, theft, loss and non-delivery, mitigating financial losses from unforeseen events.

Liability Protection: It covers your legal liabilities if your cargo causes damage to others during transportation, protecting your business from third-party claims.

Business Continuity: By minimising financial impacts from unforeseen events, freight insurance helps maintain business continuity and ensures stable operations.

 

3. Enhanced Peace of Mind:

Risk Mitigation: Knowing your cargo is insured allows you to focus on core business operations with less worry about potential disruptions.

Improved Supplier Relationships: Demonstrating proactive risk management through insurance strengthens trust and collaboration with suppliers and partners.

Strategic Advantage: Offering insured shipments can be a competitive edge, especially when dealing with international clients who prioritise risk mitigation.

 

4. Tailored Solutions for Diverse Needs:

Flexibility: Various types of freight insurance cater to specific needs, from basic coverage for standard cargo to specialised policies for high-value goods or specific risks.

Customisation: Premiums and coverage can be tailored to your specific needs, balancing risk mitigation with budgetary considerations.

Expert Guidance: Insurance professionals can assess your individual risks and recommend the most suitable coverage, ensuring optimal protection.

 

Freight insurance is no longer a luxury in today’s volatile world

Businesses rely on intricate supply chains crisscrossing continents and oceans which expose them to a multitude of risks. From unpredictable weather and economic downturns to political instability and cyberattacks, the potential threats to smooth freight transit are too many to list. This is where freight insurance emerges as a critical lifeline, offering much-needed protection and peace of mind.

So to have an anchor of security is more important than ever, and freight insurance offers just that – a stable base to weather any storm and navigate your business towards success.



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