In today’s globalized economy, transporting goods across borders and oceans is essential to doing business. With so many factors at play, cargo insurance has become a vital tool for protecting shipments from potential risks during transit. However, many misconceptions still exist about what cargo insurance covers and why it’s necessary.
Myth #1: My Carrier’s Liability Covers My Cargo
One of the most common misunderstandings in logistics is that the carrier’s liability will cover any loss or damage to your cargo. However, carriers typically only assume limited liability, which often falls short of the total value of the shipment. Carriers’ liability varies by mode of transport. It is usually capped by international conventions or regulations — such as the Hague-Visby Rules for ocean freight or the Montreal Convention for air freight. This limited liability means that shippers may only recover a small fraction of the cargo’s total value in the event of damage or loss.
Cargo insurance, on the other hand, provides comprehensive coverage that can protect the full value of your shipment. It offers peace of mind and ensures that you are not left with substantial financial losses due to unforeseen incidents.
Myth #2: My Freight Is Safe, So I Don’t Need Cargo Insurance
Many shippers assume their goods are safe because they’ve chosen reputable carriers and packed items carefully. However, even the best carriers and secure packaging cannot protect against all potential risks. Cargo theft, natural disasters, accidental damage, and even piracy are real threats that can affect shipments. Just recently, incidents of cargo theft, like the high-profile train heist in Chicago, have shown that even well-secured freight is vulnerable to theft and loss.
Cargo insurance protects against these unpredictable events, ensuring that you are financially safeguarded, regardless of how unlikely or unusual the circumstances may seem.
Myth #3: Cargo Insurance Only Covers the Physical Goods
Another misconception is that cargo insurance solely covers the physical loss or damage to goods. While physical coverage is a crucial component, many comprehensive cargo insurance policies go beyond that, covering additional costs that can arise from incidents in transit. This may include coverage for expenses associated with delays, rerouting, or even emergency measures to salvage a shipment.
For example, if a shipment is delayed due to unforeseen events like weather or customs issues, specific policies may reimburse costs associated with storage or re-shipment. Understanding the broader scope of your cargo insurance policy can help you appreciate its value in mitigating potential costs beyond physical loss.
Myth #4: My Business Can Absorb Small Losses, So Insurance Isn’t Necessary
While some companies assume they can bear the financial loss of minor incidents, these costs can quickly add up, especially for businesses shipping high volumes or high-value items. If they occur frequently, small claims can also strain operating costs and reduce overall profitability. Furthermore, even a catastrophic incident—like a vessel accident, fire, or significant theft—can incur costs that might be impossible for a business to absorb without insurance protection.
Cargo insurance provides a buffer, protecting small shipments and larger, high-value cargo from financial setbacks. Transferring these risks to an insurance provider lets your business operate confidently, knowing that your bottom line is protected against small and significant incidents.
Myth #5: Cargo Insurance Is Complicated and Not Worth the Hassle
Some shippers worry that getting cargo insurance will be a long, complex process with too many requirements and paperwork. However, cargo insurance is simpler and more accessible than ever. At Edward J. Zarach & Associates, we streamline the process for our clients, handling all aspects of policy arrangement and claims management so you can focus on your core business. We help you select the right coverage based on your specific needs, providing transparency and guidance to make cargo insurance straightforward and hassle-free.
Why Cargo Insurance Is Essential
Cargo insurance is not just a cost — it’s an investment in the stability and protection of your supply chain. For businesses shipping internationally or across high-risk regions, cargo insurance provides peace of mind and critical financial protection. Whether you’re shipping high-value electronics, perishable goods, or heavy equipment, a comprehensive cargo insurance policy ensures that your business is shielded from unexpected financial loss and can continue operating smoothly, even when the unexpected happens.
Protect your cargo from unforeseen risks and gain peace of mind. Contact Edward J. Zarach & Associates today to learn more about the right cargo insurance solutions for your business.