What is a cargo insurance or freight insurance policy?
It is a contract celebrated with an insurance company in which they assume all unexpected material damages and losses on the goods during land, air or marine transportation, on the risks specifically hired. This insurance can be hired by any person that has an interest on the transported cargo (private or public companies and individuals).
In the transport insurance, the insurance policy is the primary document and given the highly formal lining the insurance contract, its existence is necessary for validity. In the insurance insurable risks which the insurer by paying a certain premium by the insured, agrees to indemnify the latter for loss or damage to the goods during normal transportation, contract agreement agreed with the general, particular or special conditions.
What means of transportation can be included on the cargo insurance policy?
The cargo insurance cargo insurance can include different modes of transportation (separate or together) such as:
- Sea: cargo insurance during the vessel navigation.
- Land: cargo insurance during transportation via truck and/or railroad.
- Air: cargo insurance during transportation via aircraft.
What types of coverages does the cargo insurance include?
Theft (total and/or partial), ordinary transit risks, general average, water damage, oxidation, contamination (contact with other cargos), stains, loading/unloading maneuvers, warehouse to warehouse, jettison, sweep, captain's or crew barratry, storage, breakage and/or crack, spillover, among others.
In which cases does the ordinary transit risk coverage applies for land freight shipments?
Coverage applies mainly on material damage or loss caused directly by:
Fire, lightning, explosion, collision or rollover of transport vehicle used, train derailment, sinking or breakage of bridges while transport vehicle passes by, or sinking of boats whose employment is indispensable to complete the land transit. Coverage for cargo collision (and not of the vehicle) does not applies, with objects that are located out of the mean of transportation, or by falls, or by overt deficiency on the moorings or strapping used, or by surpassing load dimensional capacity or superstructure of the vehicle, either on its length, width or height.
What type of goods can be included on the cargo insurance?
For the cargo (freight) insurance , it is possible to cover a great amount of merchandise such as: wood, security equipment, clothes, footwear, grocery, diesel, construction material, furniture, medical equipment, cleaning articles, fertilizers, bottled tequila, calcium carbonate, coffee, honey, bottled and piped alcohol, agave syrup, paint, metal poles, metal structures, concrete structures, steel coils, grains and/or cereals, carcass, meat cuts, seafood, sausage, turkey, chicken, dairy products, perfumes, cosmetics, toner, lead oxide, chemical products, fruits and vegetables, jewelry, machinery (industrial, agricultural, construction) and spare parts, calendars, stationery in general, promotional items and consumables, machinery and equipment peripherals, automobile batteries, electronic equipment, printers, scanners, copy machines, computer peripherals, hardware material, electric and electronic material, computer and printer spare parts, computer consumables, medicine, canoes, kayaks, bicycles, protection equipment, weight equipment, ski equipment, wave runners, jet ski, camping equipment, climbing equipment, diving equipment, etc. All articles mentioned before will be covered as long as they are property of the insured person, or it must have an ascertainable insurable interest with authentic documents.
What type of goods cannot be included on the cargo insurance policy?
Some goods are excluded from the cargo insurance policy such as: watches, cash and securities, artworks, antiques, metals or gemstones, bank or phone cards, weapons, explosives, perishables, cotton, blood, semen, towed goods of any kind, transportation of boats, planes, or any motorized vehicle, bank documents, promissory checks, vouchers, and/or any bank document, fishmeal, jute and copra, asbestos, animals, rejected material, scrap, wines and spirits, copper, among others.
How is insured value of goods calculated?
The insured value must correspond to the value of goods at destination place, the moment of the end of the voyage, according to the following basis:
- Value of goods
- Freight charges
- Duties
- Clearance fees
- Packing
- Other expenses related to transportation
Which factors must be considered for the cargo insurance premium calculation?
The insurance company must consider the following in order to determine the insurance premium: type and size of cargo, means of transportation, route, intermediate transshipments, storages, shipping dates, insured claims history. In the case of the route, if goods are damaged outside of the route, compensation will not be effective.
What is a compensation on cargo insurance?
It is the amount that the insurance company is obliged to pay according to the contract in case of sinister and cannot surpass the amount of damages suffered, inside the agreed limits . The compensation is the fundamental characteristic for the cargo insurance. The principles of compensation are based in that nobody can pretend higher compensations than the suffered damage or loss. Additionally the insurance cannot be a cause of profit of benefit for the insured. The compensation from the insurer must not present an advantageous situation as if the sinister would not happened.
In which cases the insurance company will not apply compensation?
The insurance company will not compensate on any of the following cases:
- Gross negligence or willful from the insured, his dependents or representatives.
- Delay on the transport mean or delivery, for any reason.
- Bad stowage, packing insufficiency or deficiency, spills, losses, breakage, fermentation, corruption, overheating, temperature influence, auto combustion, oxidation, rainwater, inherent defect of the insured goods.
- Sanitary or disinfection measures, insect or woodworm gnawing.
- Smuggling, prohibited trade, embargo, apprehension or confiscation by judicial or administrative ruling.
Which is the validity for cargo insurance?
In case of land and air shipments, the validity for cargo (freight) insurance starts when the vehicle or aircraft loaded with the goods initiates the shipment transit, covered from the origin place established on the cargo insurance policy, continuing during its normal course of travel, and ends with the delivery of goods to the consignee, at the destination placed mentioned on the policy.
In case of ocean shipments, the cargo insurance validity starts from the moment in which goods are in charge of the maritime porters for the transportation in the origin port, continues during the normal course of travel, and ends with the unloading of goods over the docks at the destination port.
* The above mentioned explanations are declaratives and are not part of the insurance contract. Please read carefully the general terms that are attached to your cargo insurance policy.
