Did you know that up to 80% of shippers are underinsured? Policies today cost way lesser than you think. A good practice is to cover 110% of the commercial invoice value, plus freight and duties for all your shipments. Rates may vary but are usually a fraction of this insured value. If shipments are bundled in an annual policy, rates may be even more economical.
Suppose you have a shipment worth $100000 and something happened to it. Suppose you had a 10% net profit margin. Without insurance, you’d need $1 million in sales just to recover the cost of that lost shipment. In such a scenario, you are unlikely to replace the lost goods and sell them at the same retail prices before your demand curve plummets. Seasons change, and everything goes on just that your company loses a lot of money.
With cargo insurance, things are very different. If you pay a few hundred dollars, a fraction of the landed cost; you can fund a new purchase order. With Retail Value coverage, you could have recovered the total retail sales price and kept moving forward. This isn’t a question of luck; it is smart risk mitigation.
Here’s how you can custom-build cargo insurance policies to protect your firm’s investments.
- Scale your insurance to your supply chain.
- Get coverage no matter who ships your cargo.
- Build additional value into your cargo insurance.
From the date of cargo-ready to final delivery, your cargo goes through several hands – loading and unloading from trucks and containers, through ports and exam sites and warehouse after warehouse. Each step is required but having the goods move through so many checkpoints increases the likelihood of damage. The increased catastrophic incidents are partially due to supply chain infrastructure faltering under consumer demand. As ships get larger and containers are stacked higher, the chances of loss increase. Cargo insurance can help limit the impact of such incidents in many ways.
Majorly, cargo insurance claims arise from damaged goods, with the effect escalating from there. When a pallet arrives with visible damage, your staff must go through all the products on that pallet to ensure there’s no hidden damage to the rest of the goods before you ship it to end customers. That might cost more time and money.
The real shortage is another common source of loss. Miscommunication or missing documents may lead to your container arriving with missing cargo. Importers are responsible for claim filing, but this needs detailed photos submitted to the appropriate party. Within a timeline that varies by mode and carrier.
When going in for cargo insurance, it is prudent to choose 100% coverage, so your losses are mitigated as much as possible in the event of a disaster. Choose your insurance provider wisely and read the fine print, so you are fully covered against damage/loss.