da July 11, 2022

Cargo Insurance Meaning and Basic Data


Some freight owners want to minimize transport costs using the services of logisticians. They think it’s profitable because the probability of unforeseen situations is not so great but is it really so? However, the losses can be quite large in case of damage to the ordered goods and insurance will minimize them.

What to do?

It’s better to use a cargo insurance policy. What is cargo insurance and what does cargo insurance cover? Load insurance is the most important option that allows you to reduce risks while in shipment. The cargo insurance cost depends on many nuances and the relevant agent takes into account all possible red flags. The environment that cargo coverage insurance includes may be different.

  • Random unforeseen events (fire, flood, explosion, falling tree, lightning strike, hurricane, landslide, avalanche, and so on).
  • A traffic accident involving a vehicle carrying insured goods.
  • Missing property.
  • Robbery.
  • Break-in.
  • Burglary and seizure of property.
  • Vehicle theft.

A cargo policy contract may be concluded based on one of the following conditions.

Risks A

Losses from loss (destruction) or damage to all or part of the insured cargo as a result of any events, except for specially stipulated cases.

Risks B

  • Explosion or fire in the vehicle.
  • Wreck of a ship or aircraft.
  • Derailment, ground vehicle accident.
  • Earthquake, volcanic eruption, or lightning strike.
  • Wetting cargo with sea, river, or lake water.
  • Vehicles collision.
  • Throwing, flushing cargo overboard.

Risks C

  • Explosion or fire in the vehicle.
  • Wreck of a ship or aircraft.
  • Derailment, ground vehicle accident.
  • Vehicles collision.
  • Throwing cargo overboard.

Who is cargo insurance suitable for?

This transport insurance policy is an offer in demand in modern realities, addressed primarily to the owners of goods, as well as carriers who want to protect their property during portage. Most customers require from the transport company supplementary insurance against accidental events for specific goods. They want to be sure that there will be no incur financial costs associated with the loss of property due to an accident or any other force majeure situation.

Each client must protect himself/herself from risks and take care of freight shipping insurance before contacting a logistics company. What is better to choose: a full insurance policy or CMR? In the first case, the cargo will be protected from all risks, in the second – only from those that happened through the fault of the carrier company. Is it possible in principle to put an equal sign between them? Not, even though they complement each other. 

CMR insurance policy

CMR cargo transportation insurance is issued to protect the carrier’s assets during the international carriage from cargo damage without any default on his part. Anything can happen in practice – from a trivial accident, where the freight crumbled, damaged, or even deteriorated to the theft of the vehicle, of course, along with the contents of the truck bed. Thus, the transport company protects its assets if it is not involved in such incidents.

It is another matter when the accident with the cargo occurred due to the incompetent actions of the carrier. Well, for example, the driver contravened regulations, did not follow the rules for handling cargo, or the consignment was not securely fastened. In this case, the insurance company (where the carrier has issued CMR insurance) can reimburse you, as the owner of the cargo, up to 100% of its value. There’s a catch, the carrier’s guilt must be established and proven.

When we talk about the amount of CMR compensation, there is a nuance. When someone accidentally forgot to prescribe the cost of the cargo while filling out the policy, the rule with a liability limit comes into force. Insurers usually set a liability limit (approximately $12 per 2.2 lbs). Therefore, it is not always possible to recover the real amount of the loss. This is important and it is better not to ignore such a nuance.

You will receive full compensation for damages without any restrictions when you marked “Especially valuable cargo”, the docs are filled according to the rules, and the freight price is added, and the involvement of the cargo deliverer is confirmed. Some agreements take into account % of the franchise. This means that the carrier will also be involved in the recovery of losses. In this case, up to about 6% of the compensation will be reimbursed to you by the transport company.

Differences between transport company and freight forwarder insurance

As a conciliator between the fardel owner and the carrier, the forwarder has the right to protect his interests. This type of insurance can cover any type of transport with which the forwarder works during the cargo cartage. This also includes multimodal conveyance. In contrast, CMR insurance applies exclusively to the fleet owned by the carrier company. The forwarder carries responsibility for the load during the haulage and if the deprivation or damage occurred due to his fault (his subcontractor or representative), then everything is compensated by his insurance company.

Linden Tree Company, as an experienced participant in international transportation, always knows how, when, and how to organize delivery in order to maximize the benefit for the client. We face the need for insurance every day while working in this business area. Even though a lot of efforts are made for the safety of cargo and entire departments are involved in this issue, there are unspecified threats during cartage on the road. So insurance for cargo is an essential service that should not be overlooked. Our clients usually pay special attention to marine cargo insurance and air cargo insurance. Of course, above-ground international cargo insurance is the most popular.

Delivery of dangerous goods

Shipping freight insurance is especially important when it appears the dangerous units’ portage. The license, trained specialists, and resources make it possible to transport dangerous goods, except for precursors and ammunition. The above-mentioned category includes oil products, gas, peroxides, as well as the following substances: radioactive, toxic, biological, and oxidizing. 

Cargo is hazardous and requires freight insurance coverage if the following consequences may arise as a result of violations of handling rules

  • Material damages.
  • Harm to people, animals, and the environment.
  • Ignition.
  • Explosion.
  • Excretion of toxic substances.

We use vehicles equipped with markings according to the goods being hauled. Conveyance is performed by drivers who have undergone training and received a special certificate. We follow the rules for handling dangerous goods at all stages: loading, transportation, and unloading. Drivers have written instructions in case of emergencies. All the goods are transported in specially equipped vehicles that have received a certificate for transportation, are marked according to the type of cargo, and comply with safety, environmental, and labor protection standards. It is important to follow safety measures to avoid the negative consequences listed above. Our logistics company has the capabilities and a full package of permits. Insurance for cargo shipping is last but not least because its presence allows the driver to take the road with peace of mind, regardless of the type of cargo in the car. Take care of freight cargo insurance and our company will check up on the rest.