Why Cargo Insurance Is a Must-Have For Importers and Exporters

Businesses across all industries need cargo insurance.

No matter what you’re selling, chances are you have to move products—or will once you start to expand your operations. It’s an investment that you, as a company owner, must make to ensure your business stays competitive in an ever-changing market.

However, there are risks involved when it comes to importing and exporting.

Cargo theft is one of them, costing businesses millions of damages per year and even leading some to go bankrupt. You need to have a risk management strategy in place so you can keep your business afloat and free from financial worry.

In this blog, we’ll discuss the ins and outs of cargo insurance and the protection you should get to expect from the best cargo insurance companies.

What Is Cargo Insurance?

Transporting goods is never without its risks.

You need cargo insurance as you navigate these risks, which include goods being lost or even stolen as part of a double-brokering scam. Regardless of how it happens, these kinds of losses will hurt your wallet and your reputation and your wallet.

While stand-alone cargo insurance may be enough as basic coverage, know that you can further customize your insurance plan to ensure your goods are protected from the moment they leave the port until they arrive at your client’s warehouse.

Motor truck cargo insurance covers events such as car accidents and damages to goods due to natural disasters, while marine cargo insurance helps pay for costs arising from acts of war, piracy, and lost shipments while in transit.

Understanding the Different Types

The kind of cargo insurance you should get depends on how you intend to move your shipment across different locations. The risks of transporting by land and by sea are different, and as such your policy should reflect that.

If you’re shipping via land courier, ensure your insurance will cover freight forwarders or goods hauled by smaller vehicles. Motor truck cargo insurance, for instance, helps pay for costs related to natural disasters or collisions.

On the other hand, marine cargo insurance covers sea routes and some portions of air travel—provided that it is part of the journey. It also covers losses due to intense weather conditions, transport ship pirates, and other damages.

Some policies include an all-risk coverage policy, which protects your business against losses caused by infestations, customs rejection, or abandoned goods. Others might only include the minimum required coverage and help pay for partial losses.

Why Do You Need Cargo Insurance?

The dependence on imports and exports has grown exponentially—Canada’s trade surplus increased to $21.8 billion in 2022 as a result.

With greater opportunity comes greater expectations and smaller margins for mistakes. Unfortunately, more money in the industry also means those aforementioned scammers are more motivated than ever to try getting their hands on it, too.

Here are some of the reasons why it’s always a good idea to get cargo insurance:

Risk Mitigation for Transportation Services

Importing and exporting goods will always come with risks. This could be anything from receiving late payment for the cargo or not receiving compensation at all to suffering losses due to piracy while the shipment was at sea.

These incidents will put a dent in your bank account and might negatively impact your reputation in the industry. Cargo insurance mitigates and offers protection against these risks, keeping your business afloat.

Assurance for Customers and Suppliers

The term “General Average” might be familiar to you.

For those unaware, it’s an internationally recognized principle of maritime law that states that if a certain accident were to happen to the ship or if cargo needs to be jettisoned, all relevant parties must share in the loss equally.

Marine cargo insurance gives your customers and suppliers peace of mind by ensuring they won’t be strained by lost or damaged goods. Rather, it’s the insurance provider who assumes the responsibility.

Ensured Legal/Contractual Compliance

Cargo and transport insurance is often required by law to protect the client. Transporting goods without cargo insurance in these cases won’t just hurt your credibility—it could lead to you being hit with business-crippling fines and lawsuits.

Being proactive and protecting yourself with commercial cargo insurance will ensure you never have to worry about breaking these rules.

Better Quality Control

Marine cargo insurance includes conditions that must be followed to mitigate risks while your shipment is in transit.

For instance, glassware being shipped in bulk must be wrapped and stored in a certain way to limit as much risk exposure as possible. Another example is how fresh food must be stored in a temperature-controlled container to keep it edible.

While this does not completely assure the quality of goods will remain the same way it was shipped, cargo insurance helps you avoid as much risk as possible by showing that you did everything you could on your end.

Get Comprehensive Insurance Coverage With KASE

Lost or damaged cargo can lead to huge financial losses and legal liabilities that could lead your business to bankruptcy. Stay prepared by purchasing a comprehensive cargo insurance policy from the pros at KASE Insurance.

Whether you’re looking for marine cargo insurance, motor truck cargo insurance, or anything in between, we’ve provided businesses across a range of industries with customized insurance solutions tailor-fit to their unique needs. Our customer service and attention to detail help us stand above other cargo insurance providers.

Contact us today to learn more about our services and get a cargo insurance quote!