In the current era of booming global trade, goods flow continuously between countries like blood in a circulatory system. And a crucial element in ensuring the safety of goods during the long transportation process is cargo insurance.

I. What is Cargo Insurance?

Cargo insurance is a type of insurance that provides economic compensation protection for various risks that goods may encounter during the transportation process. Whether it is by sea, crossing the rough oceans, by land, traveling across the vast land, or by air, soaring through the blue sky and white clouds, goods are faced with uncertainties such as adverse weather, accidental collisions, theft, fires, and even wars, strikes, and other factors. Cargo insurance is like a protective suit for goods. Once an accident occurs, the insurance company will compensate the cargo owner for the losses suffered according to the contract terms, ensuring that trade activities will not be severely damaged due to damaged goods.

II. The Main Types of Cargo Insurance

1. Marine Cargo Insurance: Given that more than 80% of goods in global trade rely on sea transportation, marine cargo insurance is the most common. Among them, the basic insurance categories include Free from Particular Average (FPA), which mainly covers total losses caused by natural disasters or losses caused by accidental accidents; With Average (WA), on the basis of FPA, it also compensates for partial losses caused by natural disasters such as severe weather; All Risks has a broader coverage. In addition to including the liabilities of WA, it is also responsible for all or partial losses caused by general external reasons during transportation, such as hook damage during loading and unloading of goods, damage caused by fresh water and rain.
2. Overland Cargo Insurance: With the rise of cross-border road and railway transportation, overland cargo insurance has also become extremely important. Overland cargo insurance is similar to marine WA insurance, covering losses of goods caused by accidental accidents such as collisions, overturns, and derailments during transportation, as well as natural disasters such as lightning and floods; Overland All Risks extends to cover losses caused by external risks such as transportation delays, theft, and failure to take delivery of goods.
3. Air Cargo Insurance: Air transportation is known for its speed, but risks still exist. Air cargo insurance covers losses of goods during air transportation and loading and unloading processes due to reasons such as aircraft crashes, falls, disappearances, and adverse weather; Air All Risks also includes losses caused by general external risks such as theft and shortage during transportation.

III. Precautions When Purchasing Cargo Insurance

1. Accurately Assess the Value of Goods: Cargo owners must truthfully declare the value of the goods. They should neither underreport the value to save on insurance premiums, which may lead to insufficient compensation in case of an accident, nor overreport and inflate the value, as this may be regarded as a fraudulent act. Reasonable factors such as the cost of goods, freight, and expected profits should be taken into account in the valuation.
2. Understand the Details of Insurance Clauses Clearly: The cargo insurance clauses of different insurance companies vary in terms of the scope of coverage, deductible amount, claim settlement process, etc. Carefully study and understand them. For example, know which risks are within the scope of exemption, whether it is the exemption of natural wear and tear due to the nature of the goods themselves, or the exemption due to political unrest in specific regions, etc., to prevent disputes during the claim settlement process.
3. Select the Appropriate Insurance Category: Make a comprehensive choice based on the characteristics of the goods, the transportation route, and the mode of transportation. High-value electronic products are vulnerable to damage from vibrations, so they may require more comprehensive protection; if the transportation route passes through areas prone to piracy, the marine insurance should strengthen the relevant security clauses; if the goods have a short shelf life, pay attention to the coverage of insurance for the risk of transportation time delay during overland transportation.
4. Select a Reliable Insurance Company: Give priority to choosing an insurance company with a good reputation, strong solvency, and efficient claim settlement services. You can refer to industry ratings and customer reviews, and investigate its timeliness and fairness in handling similar cases to ensure that you can obtain compensation smoothly in case of an accident, so that cargo insurance can truly become a solid backing for cargo transportation and help international trade develop steadily.

Cargo insurance safeguards the business dreams and economic benefits behind every batch of goods in the complex and changeable logistics chain. From understanding it to making good use of it, it is a necessary skill for modern trade practitioners.