Why is Freight Insurance Important?

Whether your shipments are transported over sea, land, or air, there are always risks associated with the cargo. In an export or import business, your money and your reputation depend on the fate of your cargo.

In case your cargo fails to reach its destination it not only creates a bad impression of your business but also results in loss of money. When you lose a number of shipments, it dooms your business.

The sad truth is that when goods are transported from one location to another, there are some risks always associated with the shipment. It can never be guaranteed that your cargo will reach its destination safely. Weather conditions, road conditions, and other factors such as theft, piracy, and terror attacks make the fate of your cargo questionable.

It goes without saying that both domestic and international shipping cost a lot of money. It doesn’t come cheap at all. But there’s little the shipping company can do once your goods are lost. The compensation you receive from them is hardly enough to cover the losses.

There isn’t much you can do to rule out uncertainties associated with long distance freight shipping. But what you can do is cover yourself against risks and losses. For this reason, freight insurance is vital.

What is freight insurance?

Freight or cargo insurance is provided by shipping or global logistics companies. Such insurance covers you against the total amount spent on the shipping, so you get the whole money back if your cargo is lost or damaged.

You can get cargo insurance for every shipment, whether transported by air, land, or sea. For different items, there are different types of insurance available. Irrespective of the type of shipment or mode of transport, freight insurance is vital in ensuring you are covered against losses.

Benefits of freight insurance

When you buy freight insurance, you are covered against several types of risks during transportation including:

• Losses or damages at container terminals
• Losses or damages during local transportation
• Losses or damages suffered in terror strikes
• Damages suffered because of bad weather

If you have a letter of credit and it requests an insurance policy, you have to get freight insurance and show it to the bank for getting your compensation. In some cases, you may also be required to buy freight insurance for completing import procedures.

Freight insurance safeguards your goods against damage and loss. Regardless of the size or scale of your business, freight insurance is essential when shipping goods.