Cargo Insurance: Why Basic Coverage Isn’t Enough

Cargo Insurance: Why Basic Coverage Isn’t Enough

Whether you are shipping your products overseas, through the air, or across the country, it’s always in your benefit to plan for the unexpected. Shipments can be lost or damaged in transit, which can cause a devastating loss to a business. 

At Western Overseas, we cover your shipments beyond the basics; from General Average coverage, All-risk coverage, Free of Particular Average (FPA) coverage, and With Average (WA) coverage for ocean, land, or air freight shipments. Know your options and risk factors before choosing cargo insurance to protect your shipments. 

What is Cargo Insurance? 

Similar to home insurance, Cargo Insurance makes sure businesses are covered when an unforeseen disaster hits, and helps you to recover financially if your shipment is lost or damaged enroute to its destination. While most carriers provide a limited coverage agreement, at Western Overseas, we provide you with the right cargo insurance to specifically cover you the way you need it to.

Why is Cargo Insurance Important? 

Having cargo insurance gives you the peace of mind when shipping your items via land, air, and sea freight. If your cargo is lost, damaged, or abandoned, you’re able to submit a claim for full, or partial losses, rather than paying out of pocket. Though most carriers have a liability for cargo, that only applies when the carrier is negligent and your carrier policy does not cover the types of losses below. 

Types of Losses That Can Occur: 

General Average loss may happen when the crew takes voluntary actions to avoid danger which leads to cargo loss or damage. This could be due to a severe storm, natural disaster, fires, or a possible threat of a sinking ship that would cause the crew to have to make the decision to drop some cargo overboard. These situations happen more often than you may think, and it is important to be covered against General Average loss. With General Average losses, all cargo owners on the ship bear an even responsibility for whatever cargo is damaged or lost; even if their shipment wasn’t damaged. With cargo insurance that covers General Average loss, cargo owners are able to submit a claim to cover their responsibility of the damaged/lost cargo. 

Actual Total loss occurs when there is a complete loss of cargo; such as a sunken or missing ship, or explosion. In actual total loss cases, if the insured party receives compensation, the insurer legally becomes the owner of the insured cargo items.

Constructive Total loss is for situations where the crew abandons the vessel and all of its cargo for reasons such as costly ship damage that outweighs the price of the cargo. 

Particular Average loss occurs when insured goods get damaged and lose partial value. This usually occurs because of extreme weather conditions that may damage but not destroy cargo. 

Which coverage option is right for you? 

All-Risk Coverage: This is the strongest coverage option, where all damages and losses are covered without a deductible. However, there are exceptions to this coverage if your shipment is improperly packaged or rejected by customs. 

This is coverage that will protect your goods at their full value and covers the widest range of unforeseen losses. All Risk Coverage is an especially great option for high-value cargo. 

Free of Particular Average (FPA) Coverage: FPA Coverage is most common for marine shipments. Under FPA, cargo damage is not covered unless the entire ship is damaged (i.e. the ship sinks). 

FPA coverage is most recommended for scrap and waste material due to the fact that those materials are less likely to have high damage costs if there were issues like the ship flooding or partial damage of the cargo. While having limited coverage, FPA does cover General Average loss. 

With Average (WA): WA is a coverage option used as an add-on to the FPA coverage. This insurance covers partial loss in situations like theft, which wouldn’t be covered otherwise under FPA. 

Reasons to have Cargo Insurance

• Natural Disasters 
• Other weather related issues
• Threat of a sinking ship – cargo may need to be let go overboard
• Theft 
• Fire 
• Collision 
• Lost cargo 
• And more!

Unexpected emergencies can’t be prevented, but can be planned for. With cargo insurance, you can protect your cargo exactly how you need instead of relying on the minimum coverage that carriers give you for a smaller fee. 

As licensed Cargo Insurance Brokers, our staff is able to walk customers through their insurance options, while helping to make the most reliable, cost-effective solution. At Western Overseas, we are your one-stop-shop for all of your shipping needs so you don’t have to worry about needing multiple contacts for each part of the shipping process. 

Don’t take the financial risk of shipping uninsured. Contact us today to discuss your options!