How Container Cargo Insurance Works, Step by Step
Our earlier article on cargo insurance explained why you should insure. This guide goes one step further: how container insurance works, what you need to buy it, what it covers and what to do if your goods arrive damaged.
It's a practical guide for U.S. shippers and for importers in Central America. If you haven't read the earlier article yet, start with why cargo insurance is vital.
1. Who buys the insurance
The shipper, the receiver or both, depending on what was agreed in the sales contract. What matters is to settle it in writing before the cargo ships: once damage happens, it's too late to decide who should have insured.
2. What details you need
Only a few details are needed to insure a container, but they must be accurate:
The cargo value. The insured value should reflect the real value of what is shipping.
The type of product.
The route: port of departure and port of arrival.
The packaging.
The dates of the shipment.
3. What is covered and what isn't
A cargo policy usually covers damage, total or partial loss and theft during transport. It also has standard exclusions, and one of the most common is insufficient packaging. That's why it pays to get this right: read our guide to international packaging. Always ask for the policy in writing and review the exclusions before the cargo ships.
4. General average, explained clearly
When a vessel has an incident at sea, all cargo owners pay a share of the costs, even if their container is intact. This is called general average. If your cargo is insured, the insurer covers that share; if not, you pay it.
5. If your cargo arrives damaged
Take photos of the container and the goods before moving anything.
Note the damage on the delivery document when you receive the cargo.
Notify your insurer and your logistics provider right away.
Keep all shipping documents: invoice, packing list and bill of lading.
6. How to quote insurance with your freight
Insurance is quoted together with freight, using the details above. If you're still comparing offers, first read how to read an FCL freight quote. Once your route is clear, get a quote and include cargo insurance.
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