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Cargo Insurance Policies
The decision of whether or not to insure your freight is not always a clear-cut, simple choice. There are many factors to consider, such as the total value of the goods shipped, the shipping origin and destination, the mode of transportation, etcetera. Once the determination is made, the next question is how to ensure the shipment. To assist you in your evaluation, the options below outline the types of coverage available.
When transporting goods with a carrier, a shipper is granted a minimal amount of coverage in the event of loss or damage in transit. The coverage is called legal liability and it is the legal obligation of a carrier to provide remuneration in the event of loss or damage of goods they are transporting. Limitations vary by model and are established by international/domestic treaties.
For domestic shipments the coverage is equal to $0.50/LB with a $100.00 minimum provided the cost of the goods is greater than $100.00. In the case of partial loss/damage, only the lost or damaged portion of the freight is subject to the claim settlement amount of $0.50/lb. For international shipments, the legal liability set forth by the Warsaw convention is $20.00/kg or the actual value of goods if less than $20/kg. For international sea freight shipments, the legal liability limit is $500 per customary shipping unit. (FCL: 1 container = 1 shipping unit, LCL: shipping units = piece count on the Ocean Bill of Lading)
When there is partial damage/loss, the legal liability settlement is based on the weight or number of units (sea) of the damaged/lost pieces(s), not the total shipment.
General Average
General Average is a unique law that applies to the global maritime industry that can directly impact a cargo owner, regardless of the damage to your own consignment. The principal is meant to share the risk/loss that may occur when steps are taken to prevent the total loss of a vessel, crew and/or its cargo.
When general average occurs the vessel owner is no longer responsible for any cargo loss or damage. Every cargo owner on the vessel becomes responsible in a proportionate part for the loss of other cargo and the vessel itself.
There are many situations that can cause a general average claim, but most often include instances where cargo or ship material is thrown overboard to lighten a load. This may be due to severe weather, grounding, etc. Other instances can include fire, collision or other events that may jeopardize the vessel.
When a general average claim applies all cargo is seized and can generally only be retrieved when the cargo owner puts a security deposit or bond in place. The claim amounts can be substantial, and the resolution can take years.
The purchase of All Risk Cargo insurance includes coverage for general average claims, including the security bonds needed to retrieve seized cargo.
What To Do When There Is Damage
Proper notation on shipping documents and notification to the appropriate parties is essential to ensure the ability to process a claim. Like all insurances, payment of the premium and freight charges is required in order for coverage to be confirmed and a claim to be filed and ultimately settled. As an example, if you don’t pay your auto insurance and get into an accident then you don’t have any coverage.
If the damage is noted on the bill of lading at the time of delivery, then the claim must be submitted in full within 270 days of actual delivery. It is not necessary to refuse a shipment if proper damage is noted. GlobalMoves logistics should also be notified immediately.
If the damage is not notated on the bill of lading at time of delivery (concealed damage), then we must be notified within 24 hours of delivery. When concealed damage occurs the burden of proof is on the insured party prove that the damage was shipping related.