Insurance coverage extends to a wide variety of methods of delivery of goods.

• Motor cargo insurance will help protect products during transportation by any type of motor vehicle, regardless of capacity and weight.

• Protection of goods during railroad transportation.

• Delivery by sea transportation. Such cargo insurance is especially in demand during international transportation.

  In most cases, carriers protect themselves and insure their liability (carrier liability insurance). That is, in case of damage or loss of goods, the owner will receive compensation only if the fault of the carrier is proved, but in any other circumstances – not.

  It is necessary to understand that in addition to the errors of the transport company, a large number of risks are associated with international transportation.

The main risks against which you can insure your cargo:

• natural disasters (flood, storm, earthquake, forest fires, etc.);

• other force majeure circumstances (e.g. port strike);

• damage to the cargo in the course of transportation (getting wet, crumpled, broken, etc.);

• ROAD TRAFFIC ACCIDENTS;

• partial or total theft;

• damage / loss during loading and unloading operations;

• damage / loss during intermediate storage.

  Despite the fact that in Russia cargo insurance is optional by law, this service is becoming more and more widespread for domestic transportation, and especially for international transportation.

  Currently, many transportation companies offer cargo insurance services, but you can also save money and insure your cargo directly with an insurance company. It should be noted that under Russian law, cargo can only be insured once, so you will need to decide where to insure your goods during transportation: directly with an insurance company or through a transportation company.

Cost of cargo insurance

Each insurance company has its own rate schedule for calculating the cost of insuring goods during transportation.

On average, the rates range from 0.05% to 0.3% of the declared value of the cargo.

The size of the interest rate is influenced by such points as the type of transportation, the availability of packaging, and the route. Let’s consider each item in detail.

Influence of the nature of the cargo on the cost of insurance

It is necessary to provide the exact name of the cargo or the HS code. The nature of the cargo is important here – the insurance company will check which category of goods your goods belong to according to the tariff schedule. Thus, the lowest insurance rate will be for goods with the lowest risk of damage (stone, metals). Insurance of fragile, valuable or perishable goods will cost more.

In principle, you can insure any cargo, including oversized, dangerous, with the only difference that some types of cargo require special approval. These are goods with excise stamps, stones and precious metals, jewelry, cash. Works of art, plants and flowers, transported animals and, of course, the military arsenal – ammunition, weapons – are specially coordinated for transportation.

Risk level for different modes of transportation

Each type of transportation has its own level of insurance risk, so the insurer uses different interest rates for different types of transportation:

• Air freight – is considered the safest way of cargo transportation and therefore has the lowest insurance rate. It should be noted that it is still recommended to insure cargo when using air transportation, as there is a risk of theft at airports. This is especially true for valuable and expensive cargoes, and they are usually transported by air.
• Sea delivery – has a higher insurance risk and, accordingly, a higher insurance rate. This type of transportation involves such risks as damage during loading and unloading in the port, cargo transportation, weather conditions.
• Railway transportation – is also associated with a number of insurance risks. Here it is possible damage in case of derailment of cars, loading and unloading, theft of cargo.
• Automobile delivery – is considered the least safe way of cargo transportation and, as a rule, has the highest insurance rate. Here it is necessary to note the technical condition of cars and possible breakdowns, road quality, weather conditions. All this may partially damage the cargo or even lead to its total loss.

Influence of cargo transportation route on insurance rate

Each insurance company has its own rates, but, as a rule, the rate of cargo insurance for international transportation, for example, from Europe, North America or Japan will be lower than the rate for cargo transportation from Asia, Africa, Central and South America.

You should also take into account the presence of military actions, unrest. In these cases of insurance, the company bears more risks, so the rate may be higher. Some companies completely refuse to insure transportation to these regions.

Insurance for cargo covers not only at the time of its movement, but also reloading, temporary storage in a warehouse or terminal. Of course, provided that all this occurs during the period of insurance and in the previously agreed territory.

The territory of insurance coverage means a country or several countries through which the route of the insured cargo, including its passes and temporary storage, passes. Insurance companies in Russia can insure the transported cargo all over the world, but on condition that it affects the interests of our country and CIS countries. In other words, the cargo is shipped from or to Russia and the CIS, or the cargo owner or cargo beneficiary has at least 50% of its capital in these countries. Areas where military conflicts are taking place are not insurable.

Packing of cargo

Open packaging poses a greater risk. This applies to oversized cargo. Insurance of cargoes transported in containers or other packaging will be calculated at a lower rate.

One-time transportation or under a general pole

The rate for a one-time shipment will be higher than for a master pole (usually contracted for a year for one category of goods).

Incoterms – moment of transfer of responsibility for the cargo

For international trade, Incoterms are the terms of delivery that regulate the responsibilities of the Seller and the Buyer when transporting goods from abroad. As a rule, each party is responsible for insuring the cargo on its own part of the route. For example, if you buy goods FOB, port of shipment, the Seller will be responsible for shipping and insurance until the goods are loaded on board.

Sum insured

As a rule, the value of the cargo under the contract with the supplier is used as the sum insured, but if desired, this amount can be increased by the cost of transportation and up to 10% of the value of the cargo against the expected profit.

Trucking insurance deductible

When drawing up an insurance policy, it is often agreed in advance that the amount that is not paid by the insurance company in the event of a loss, i.e. deducted from the payout. This amount is called a deductible and is either conditional or unconditional. Conditional franchise is a certain amount set in the contract. If the loss on cargo transportation exceeds this amount, the insurance company covers it in full.

Let’s consider an example of conditional franchise. Let’s assume that the cargo was insured for 100 thousand dollars, and the conditional deductible amounted to 1000 dollars. Then at a loss of $990 the insurance will not be paid, and there is no point in applying for it. But if the loss is not less than $1001, it is covered in full without any deductibles.

The amount of the unconditional deductible is deducted from the payout when the amount of loss is covered, whatever it may be. That is, the insurance company will cover the loss while deducting the unconditional deductible. It is fairly believed that the owner of the cargo will be more interested in its safety and passing the whole route without losses, if the unconditional deductible is specified in the policy.

International cargo transportation insurance specifies all possible types of risks. Insurers are obliged to cover damage in case of transport wreck or loss of part or all of the cargo in its entirety, if unlawful actions of third parties have been applied to the loss of cargo. However, the policy shall also include a clause for reimbursement of expenses related to search and rescue activities or actions to save the transported goods.