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Don't Make These Cargo Insurance or Shipping Insurance Mistakes
You don't know how often these mistakes are made when a shipper is trying to save money. Especially for new shippers, it's usually because he doesn't understand where the gotcha's are in his shipments.
Usually, the problem is not understanding who is responsible for what? Or how much the carrier is responsible for and how much you are responsible, as the shipper.
You, the shipper, who actually own the products and want to get them transferred safely and conveniently transported to the destination on time, frequently we assume that he's assumed more responsibility than he actually will assume. We also assume that he's responsible for either getting it there in one piece or paying u for the value of the product that is lost if it doesn't get there in one piece.
And even then, one misunderstanding might be how much the carrier will reimburse you if something does go wrong. Let's say that you have a shipment of your products that cost you $1,000 per item for you to produce, that's price one. But the company you are delivering it to has paid you $1,500. So, which of those do you get reimbursed for, or do you get reimbursed for either of those. And then, let's add in yet another value. If it isn't delivered, or if it doesn't get there on time, the loss to the company you are responsible to deliver to is over $10,000 per item because they can't include it in some product they use it in.
Who is responsible for what and for how much?
Carriers are not liable for loss or damage caused by mother nature ... you are
Natural disasters aren't predictable and most carriers make sure that they aren't responsible in their contracts. A shipment at sea that gets tossed around and gets damaged, or wet is your responsibility. Maybe it should have been packed better. In any case, you have to protect yourself by carrying your own insurance.
The carrier's insurance, or the buyer's insurance Is Not Enough
I always tell my clients to never allow themselves to be at the mercy of anyone or anything. It's just way too risky to rely on someone else's insurance. Buy your own insurance! Then you are in control of what kind of coverage, how much, and the ultimate cost.
Stolen or Mishandled Cargo is Your Responsibility
Carriers typically limit how much they are liable for. If your cargo is stolen or damaged in transit, guess what? Sometimes you may not even be able to recover replacement value.
How Much?
As I said several places above, frequently the carrier limits not only what he's responsible for but, according to tarrifs and the bill of lading he may limit how much he's responsible for. You may not even be able to recover even the cost of replacement.
Always be in control, buy your own insurance to cover the value of the shipment. Work with your own insurance company what will be covered and how much. Don't be at the mercy of anyone - be in control.
By planning what your coverage should be rather than living with the carrier's insurance you can design the outcomes and limit your risks
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