Cargo insurance in import and export is essential to protect goods from risks during transit, such as accidents and natural disasters. Insurance helps reduce financial risks by ensuring compensation for damaged or lost goods, maintaining business continuity, and building trust with clients and partners. While some importers may avoid insurance to cut costs, they realize its value when problems arise, as insurance provides compensation for losses.
Many importers prefer not to obtain insurance for their goods in order to reduce costs. However, importers realize the value of cargo insurance after an issue arises with a shipment. If the goods are damaged, you will often not receive compensation and will lose everything. But if you have insurance, you will be compensated.
You have two options if you have goods in transit, which are as follows:
Option 1: Do not request cargo insurance for the goods
You can choose not to obtain insurance for the goods. Instead, if something happens to your shipment, you can claim compensation from the carrier. This may seem less expensive for you, but things may not always go as planned.
Under the carrier’s terms and conditions, you will receive minimal compensation—about $2 per kilogram if the mode of transport is air freight, and $500 per shipping unit, which can vary from small to large containers if the mode of transport is sea freight.
In some scenarios, carriers might not bear legal responsibility, even if the incident causes complete damage to the shipment. It may take a long time to claim compensation from the company, and there is no guarantee of success.
Ultimately, if you decide to go with this option, you need to be fully aware of the carrier’s terms and conditions so you know what you will receive if your shipment is at risk. This option may be suitable if the value of your shipments is very low.
Option 2: Request cargo insurance for the goods
In this option, you can obtain an insurance policy to cover the actual value of your goods. If you wouldn’t consider not insuring your home or car, you should think twice about insuring your shipments and goods, which are more prone to accidents.
Honestly, cargo insurance is very inexpensive—why not purchase it?
The best way to purchase cargo insurance is when requesting shipping quotes. The carrier will provide you with comprehensive insurance quotes, so you won’t need to spend a long time researching and comparing companies, as there won’t be a significant difference.
Adding insurance to your goods when requesting a shipping quote ensures that your insurance is purchased before the goods are loaded onto the ship or plane. You will need comprehensive coverage for all risks instead of just covering losses. However, keep in mind that comprehensive insurance for the shipment has limits, as you will not be compensated for any sales loss resulting from shipment delays.
For example:
The claims process for insurance is straightforward, and intermediaries or logistics and customs service providers like Badr International (BIS) will handle most of the work on your behalf.
We are also happy to receive any requests or inquiries regarding cargo insurance. You can contact us through the contact form here.