If you’re handling third party freight, freight insurance is a value added service that also can help you manage your cargo liability exposure.
In the event that things in transit are lost or damaged, freight claims are the means of regaining some of that lost value. Yet, just as in any insurance situation, it is extremely important that you simply take all of the appropriate and suitable measures. In understanding how to better handle cargo claims the first part, starts before you start shipping: picking the right amount of cargo insurance and freight liability. But, do you understand the difference?
Cargo Insurance and Cargo Indebtedness Explained
In the unfortunate position that your cargo is lost or damaged, it’s important to know what’s covered by freight insurance insurance and what is covered by obligation and what is the difference between the two.
Freight insurance will not provide protection against all losses a motor carrier may be liable for under the Carmack Amendment or common law. There is no single normal kind of freight insurance that a carrier can go out and purchase and be totally shielded. Similarly, a certificate of insurance stating that a motor carrier has a given quantity of freight insurance does not mean that agent or the shipper’s ’s that cargo insurance will covers valid claim.
It thus is incredibly significant that all motor carriers, shippers, agents, consignees and others that have an interest in a cargo be aware of the extent of the motor carrier’s obligation for cargo loss under the relevant law and the extent the motor carrier’s freight insurance provides protection for that liability. Unless the motor carrier is financially strong and pretty big, an uninsured judgment against it may be unworthy.
The costs of cargo insurance
The selection of whether to insure your cargo is not always a clear cut, straightforward option. There are many factors to consider, the way of transfer, like the entire worth of the goods sent, the shipping origin and destination, etcetera. The next question is the way to assure the shipment, once the determination is made. To assist you in your assessment, the alternatives below outline the kinds of coverage available.
If you choose not to pay to ensure your shipment, the goods shipped are automatically covered under legal culpability standard to the transportation industry. For domestic cargoes the coverage is equal to $0.50/LB with a $100.00 minimum supplied the cost of the goods is greater than $100.00. In the case of partial loss/damage, only the lost or damaged portion of the cargo is subject to the claim settlement sum of $0.50/lb.
Put simply, freight insurance provides a cost effective means of covering yourself for physical loss or damage, as well as your customer to goods in transit. It provides extra value to your customers and helps differentiate you from your competition.