As the saying goes - bad things can happen to good cargo. As a shipment moves through the various stages of its journey from point A to point B, there are countless physical perils it encounters that can cause damage or loss. In those situations, what could be the financial impact for the cargo owner?
Here are a few examples of what is at risk, and what kind of coverage all-risk cargo insurance can provide. *
Container Overboard
A vessel sailing from Shanghai to Oakland encounters a severe storm on the Pacific. A container loaded with machinery for a new processing plant falls overboard and sinks to the bottom of the sea.
• Value of machinery: $80,000
• Freight charges: $10,000
• Carrier liability payment: $0. Oceanic storms and other natural disasters fall outside the scope of carrier liability
• Insured payment: $99,000
Tarmac Trouble
A small 20kg shipment of microchips is traveling from Paris to Denver. While changing planes in New York, the shipment is left on the tarmac in the heavy rain for several hours, destroying the chips.
• Value of microchips: $150,000
• Freight charges: $400
• Carrier liability payment: $600 (440SDR); even though the carrier was found at fault for leaving the shipment in the rain, they are only liable for up to 22SDR (about $30) per kg
• Insured payment: $165,440
Jackknife Semi
A shipment of USDA beef weighing 10,000 pounds is being shipped on a refrigerated semi-truck from Dallas to Cleveland. While on the freeway, the truck is sideswiped by another vehicle, which causes it to jack-knife, roll over, and spill the shipments from inside the trailer all over the road.
• Value of merchandise: $40,000
• Freight charges: $2,000
• Carrier liability payment: $0, accidents outside of the carrier’s control fall outside the scope of carrier liability
• Insured payment: $46,200
Stuck at Sea
While sailing from Buenaventura to Miami, a vessel loses power and needs to be towed into a port in San Juan for repairs. The vessel owner declares General Average, which means the expenses to tow and repair the vessel are shared proportionally by the various cargo owners on the vessel. In order to receive the shipment at the destination, the importer must post a bond and pay the General Average expense.
• Value of merchandise: $50,000
• General Average expense: $6,000
• General Average expense with cargo insurance: $0
The difference between the value of a shipment and what the carrier is liable for can be surprising. At ECIB, our goal is to maximize recovery and bridge the gap to ensure our clients have peace of mind that they will be taken care of in the event of damage or loss to their cargo. As a specialty broker, we have developed the systems, resources, and assets required to manage cargo insurance programs of all scopes and sizes.
For more information on how ECIB can support your organization with cargo insurance, please reach out. We're happy to help.
*All examples, figures, values, and outcomes are hypothetical. Carrier liability is determined by international conventions, treaties, and other domestic & international governing bodies. Insured values determined by specific policy terms and conditions.