Definition
Cargo insurance is a type of insurance that provides coverage for goods and merchandise while they are being transported. It is designed to protect the financial interests of the cargo owner in case of loss, damage, or theft during transit.
Coverage:
Cargo insurance typically covers the following risks:
- Loss or damage to the cargo due to accidents, such as collisions, overturning, or derailment of the transport vehicle.
- Theft or pilferage of the cargo during transit.
- Damage caused by natural disasters, such as storms, floods, or earthquakes.
- Loss or damage due to fire or explosion.
- Damage caused by improper handling or stowage of the cargo.
Types of cargo insurance
There are two main types of cargo insurance:
- All risk coverage: this type of insurance provides coverage for all risks of physical loss or damage to the cargo, except for those specifically excluded in the policy.
- Named perils coverage: this type of insurance covers only the specific risks that are listed in the policy. It is usually less expensive than all risk coverage, but provides limited protection.
Importance
Cargo insurance is important for both shippers and carriers. For shippers, it provides financial protection in case of loss or damage to their goods during transit. For carriers, it helps mitigate their liability and reduces the risk of financial loss in case of an accident or other unforeseen events.
Legal requirements
In the EU, cargo insurance is not mandatory by law. However, it is often required by carriers, shippers, and other parties involved in the transportation of goods. It is also a common requirement in international trade contracts.
Conclusion
Cargo insurance is a crucial aspect of international trade and transportation. It provides financial protection for cargo owners and carriers, and helps ensure the smooth and safe delivery of goods within the EU.