Types Of Shipping Insurance Coverage

Automotive Blog

Shipping insurance is an important consideration when hiring heavy machinery transport services. When you obtain shipping insurance for your shipment, you are guaranteed of partial or full reimbursement in the event of loss or damage to the shipment. This makes shipping insurance an even more reliable security measure than real-time tracking. Choosing shipping insurance, however, is usually not a very straight-forward process. This is because there are numerous forms of shipping insurance arrangements to choose from, with each having its own advantages and disadvantages. The main types of shipping insurance are discussed below.

All-risk cargo insurance

All-risk insurance covers are the most comprehensive shipping insurance covers available in the market. They cover all forms of loss or physical damage due to external forces. All-risk insurance policies are subject to extremely few exclusions. These exclusions typically include willful misconduct by the insured, radioactive contamination and nuclear events. Where such risks are deemed eminent, insurance against them may be acquired at an additional cost.

Basic risk coverage

As the term implies, these insurance policies cover loss or damage that may happen due to commonly occurring risks. This often covers risks such as collision, fire, leakages, accidents involving the transportation vehicle and weather-related hazards such as floods and hurricanes. However, they often exclude risks such as wars, civil unrest, strikes and riots, all which are included on all risk covers. Basic risk insurance policies are usually cheaper than all-risk covers and are often chosen by many cargo owners.

Named perils coverage

This covers specific hazards that are listed under the policy. Arguably, named perils covers are a form of basic risk covers, but ones that indicate a limited list of perils covered under the policy. For example, a sample named perils insurance policy may list sinking, burning, collision, fire and crashes as the covered perils. All other hazards not listed in the policy are excluded from the insurance cover.

CIF insurance covers

The initials CIF stand for Commercial invoice value (C), Insurance costs (I) and Freight (F). CIF insurance policies cover the cost of goods and shipping charges. When you purchase a CIF cover, your reimbursement in the event of loss or damage of the shipment shall include the value and the freight costs of the lost or damaged goods. Where part of the freight was lost or damaged, the amount of the freight costs to be paid back is determined by calculating the proportion of the damaged or lost good to the total freight.

15 January 2015