Get to know the vital terms of Logistics and Supply Chain Management.
It acts as a protective cover on the goods in transit against potential loss or damage. No matter whether the transport is land or sea or through the air; goods incur various types of risks or perils associated with accidents, theft, and natural disasters. The benefit of this insurance lies in its ability to cover the business, shippers, or consignees financially against losses or damages encountered to cargo.
Cargo insurance is given by insurance companies or insurance agents who have dedicated themselves to covering commodities in transit. The coverage can be purchased prior to shipment and an insurance premium is normally deducted at the time of shipment if the policy is issued.
Cargo insurance charges are paid to reduce the risk amount that might occur during the transporting of goods. It helps in financial loss due to damage or theft, so neither the shipper nor the consignee may be surprised by extra costs. Thus, the business, regardless of the way of transportation, secures the goods if it buys cargo insurance and protects its financial interests.
Cargo insurance is normally applied either at the point of shipment or, in other words, when the insurance policy is bought. The policy is valid from the time the cargo leaves the point of origin till it reaches its final destination. The amount to pay for cargo insurance varies according to a lot of factors, among them, the value of the goods, the distance traveled, and the mode of transport.
Basically, cargo insurance provides comfort on the value of goods in the course of transit. Since it also covers damage or loss, it ensures that businesses are protected and that a supply chain continues to function well.
