Why Get Cargo Insurance?
You have shipped a cargo of costly industrial components to your overseas client. The components are packed securely to protect against moisture, dust and impact. These goods are further loaded into cartons that are securely fastened to pallets and loaded into the final shipment container.
As the container leaves your shore and is in transit, you relax, till you turn on the news and hear about a severe storm on the very route your cargo is headed. And now you worry, is your cargo really safe? Are you heading for a potential loss?
Logistics companies in Dubai take every precaution to safely and securely pack your cargo shipments while onboarding and in transit. However, there is always a chance that your cargo may be damaged due to bad weather, accidents or other untoward incidents. While Logistics companies in Dubai provide adequate coverage, it is advisable to be doubly covered with additional cargo insurance to hedge your losses.
Cargo insurance can be availed based on various parameters such as the nature of cargo being shipped, quantity, value, perishability, etc., in addition to the mode of transport, i.e. Land, Sea or Air.
Types of Cargo Insurance
There are various types of cargo insurance with different coverages and limitations. For ease of understanding, we will cover the insurance based on different modes of shipment.
Insurance coverage will vary based on the mode of transport, nature and value of the goods being shipped, origin, destination and route.
Land or Haulier cargo Insurance
This is for cargo shipped by Land. The mode of shipping can be trucks or any other road or rail vehicle which is used to transport cargo within UAE or across the GCC region (where allowed). The general coverage of Land cargo insurance includes loss due to collision, road accidents, overturning of vehicle and theft.
Depending on the nature of goods, specific additional coverage may be required to cover the loss of perishable goods due to malfunctioning refrigeration or heating systems or wear and tear due to transport.
Marine cargo insurance
This is for cargo shipped by Sea. The mode of shipping is by ships to or from Dubai and the UAE to international territories. The general coverage of Marine cargo insurance includes loss or damages due to loading and unloading, piracy, bad weather or other accidents while the shipment is at sea whilst in possession of the Logistics company.
Just like land cargo insurance, depending on the value and nature of goods, specific additional coverage can (and should) be added for perishable, fragile, explosive or hazardous cargo.
Air Cargo Insurance
This is for cargo shipments transported by air. The mode of shipping is by regular aeroplanes or specialised cargo aircraft. Air Cargo Insurance covers loss or damages due to loading and unloading, air turbulence, bad weather conditions or other accidents while shipment is being transported or is in possession of the Logistics company.
Generally, air cargo insurance policies will need specific riders or increased coverage for hazardous, perishable or delicate goods.
Types of Insurance Coverage
There are 3 key types of insurance policy coverage which vary as per the premium and coverage provided. While All Risk and Named Perils coverage apply to all modes of shipment or transport, General Average coverage is specific to shipment by sea.
All Risk
All Risk coverage is a broad coverage policy covering most general causes of loss or damage to cargo, including negligent or improper packaging, cargo capture, customs objection, and workers’ duplicity.
Contrary to its name, All Risk coverage does not include the following:
- Carelessness or negligence during shipping
- Inherent vice – where the cargo may be damaged or quality deteriorates due to environmental conditions
- Cargo or Freight abandonment
- Customs rejection
- War, strikes, riots, and civil commotions, commonly termed as WSRCC
- Non-payment or failure to collect
- Other force majeure factors like earthquakes, war, pollution, infestation, etc
Named Perils
Named Perils (or Free of Particular Average) coverage includes damages caused due to specifically included conditions like:
- Vessel collision, sinking or derailment
- Bad weather, Earthquake
- Non-delivery due to specific conditions
- Fire or Theft, etc.
General Average
During an emergency, when at sea, the ship can jettison cargo to preserve life and minimise loss or damage to remaining shipments. In this case, the law indicates that the loss is shared proportionately by all parties with a financial interest in the voyage. What this means is that all owners of cargo being shipped on a vessel, which has faced damages while at sea, will share the losses from damages caused to their cargo. Sometimes, this can result in cargo owners, who have not suffered any or minimal damage, having to pay other cargo owners whose shipments were damaged or lost.
Insurance coverage for general average loss is not generally covered and needs to be specially included. It is recommended for all cargo owners to include coverage for general average as the financial damages under general average in the event of an emergency, can often be higher than the financial value of your actual cargo.
Get Your Cargo Insured
Cargo insurance premiums depend on the type of coverage, shipment value, nature of goods, origin and destination and mode of transport. Choose the right insurance coverage to mitigate the risk of loss or damage to your cargo shipments, and ensure peace of mind. Consult a trusted Logistics company in Dubai to identify the best insurance policy and coverage for your cargo shipments to or from Dubai and the UAE.
