Common Mistakes to Avoid When Purchasing Cargo Insurance

Cargo insurance is a vital component of international trade, providing protection for goods during transportation against various risks. Understanding the common mistakes to avoid when purchasing cargo insurance is crucial to ensure adequate coverage and prevent potential financial losses.

Common Mistakes To Avoid

Misunderstanding The Scope Of Coverage:

• Clearly differentiate between "all-risk" and "named perils" policies.
• Carefully review the list of covered perils to ensure adequate protection for the specific cargo being shipped.

Insufficient Coverage Limits:

• Accurately value the cargo to determine appropriate coverage limits.
• Understand the consequences of underinsurance, including potential financial losses in case of a claim.

Lack Of Proper Documentation:

• Maintain proper documentation related to the cargo, such as bills of lading, invoices, and packing lists.
• Documentation plays a crucial role in facilitating claims processing and avoiding disputes.

Neglecting To Declare Valuable Items:

• Declare valuable items separately to ensure adequate coverage.
• Failing to declare valuable items may result in claim denials or limited coverage.

Failing To Review Policy Terms And Conditions:

• Carefully review the policy terms and conditions before purchasing cargo insurance.
• Understand key terms and conditions, such as exclusions, deductibles, and time limits for filing claims.

Not Considering Additional Coverages:

• Explore additional coverages, such as war and strikes coverage, pilferage coverage, and extended coverage for delays.
• These additional coverages provide comprehensive protection against various risks.

Avoiding these common mistakes when purchasing cargo insurance is crucial for businesses engaged in international trade. Carefully reviewing the policy terms and conditions, understanding the scope of coverage, declaring valuable items separately, and consulting with insurance professionals can help ensure adequate protection for cargo and mitigate potential financial losses.