Logistics professionals take on a very important responsibility when it comes to the safe arrival of goods and merchandise for their clients. Whether products travel by truck, rail, air or sea, contingent cargo insurance protects valuable cargo from a variety of potential losses. Whenever arranging a big shipment of goods for an important customer, it pays to have coverage in the event there are damaged, stolen or lost goods.
Failing to properly provide protection could greatly strain the relationship with that customer, not to mention any time loss, as well as any stress and resulting legal fees. Most businesses have a tough time bouncing back from these types of losses, unless they have the necessary contingent cargo coverage.
Policies are available for times when claims occur
The insurance industry has created a variety of insurance products in response to the growing third party logistics industry that are marketed to brokers as protection for cargo claims. For those not familiar with the type of contract obligations and duties assumed as a matter of practice by those who broker motor carrier and other methods of transport, many brokers assume the obligation for any cargo loss and subsequent damage claims.
It is well established that brokers must market their service in competition with asset-based carriers who, of course, take responsibility for such claims. In doing so, they typically assume various versions of direct responsibility for cargo claims. They may, for instance, sign a shipper agreement that makes them directly responsible for any claim. This would be the case only after the motor carrier denies or refuses the claim. They may also be held responsible after they have processed the claim with the motor carrier, and if, for a variety of reasons (i.e., deductions, exclusions, or limits) the claim is not fully indemnified to the satisfaction of the shipper.
Whether arranging for the transportation of goods across the nation or around the globe, there’s always a chance the product won’t make it to its destination or may become damaged in transit. Thefts, accidents and sinking ships can wreak havoc to the bottom line of any company. To protect against these losses, a customized contingent cargo insurance program is essential. Anyone who owns, manage or operates any of the following businesses should consider speaking to a commercial cargo insurance expert:
- Transportation brokers
- Importers and exporters
- Logistics providers
Contingent cargo insurance has two objectives; it protects both the assets and the reputation of the business, and it enhances and protects relationships with customers.