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Why Do You Need Cargo Insurance For Your Shipment? - Business - Nairaland

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Why Do You Need Cargo Insurance For Your Shipment? by Tayogeorge(m): 12:57pm On May 02, 2019
Importers, exporters and other party players, have been encouraged towards getting insurance for their cargo. However, when the purpose of a thing isn’t known, abuse is inevitable. That is why Valuehandlers has decided to give an insight to reasons why your goods (import or export) need cargo insurance.

Cargo insurance covers loss of or damage to goods while in transit by land, sea and air.

Read Marine Cargo Insurance

Some believe that by not insuring their cargo, they are saving a lot but that isn’t true. Reasons why you need cargo insurance include:

1. Insuring your cargo reduces exposure to financial loss: An exporter who has not been paid for the goods at the time of shipment, or an importer who has paid for all or part of the goods prior to receiving them, runs the risk of suffering a financial loss if the goods are lost or damaged during transit.

2. In terms of general average, getting cargo insurance for your cargo expedites the release of your cargo: You may be required to post a bond and/or cash deposit in order to obtain release of your cargo following a general average – even though there was no loss or damage to your goods. By purchasing insurance, your insurance company assumes the responsibility and expedites the release of your cargo. General Average is an internationally accepted principle where if certain types of accidents occur to the vessel, all parties share in the loss equally.

3. Cargo insurance is important because it could be a contractual requirement: Your sales contract may request that you to provide ocean cargo insurance to protect the buyer’s or banks’ interest. This is especially true when selling goods CIP or CIF. Failure to do so cannot only subject you to financial loss if there is loss or damage to the goods, but non-compliance with the terms of your contract with the buyer can lead to loss of sales and legal problems.

4. Insuring your cargo covers limited carrier liability: By law, carriers are not responsible for many common causes of loss that occur in transit (for example, acts of God, general average, etc.). And, even if they are liable, carriers’ liability in the event of a loss is limited – either by contract in the bill of lading or by law. In most cases, you will only recover cents on the dollar from the carrier. This is why it is advisable to insure your cargo.

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