Cargo insurance is one of the most vital and overlooked aspects of obtaining custom container solutions for the successful shipment of international freight and importing and exporting of goods.
While the advanced 3PL and freight forwarding services offered by Asiana USA work to streamline your shipping process and drastically reduce the risk of incident, as a shipper, it is important that you understand just how much your business could stand to lose if your shipment were damaged or lost in transit.
Whether due to inclement and unpredictable weather at sea or in the air or today’s constantly shifting and sometimes hostile geopolitical climate, shippers should be acutely aware of these common cargo exclusions and how they can affect your business.
1. Inherent vice of a product
The term inherent vice refers to the tendency of objects to incur damage or deterioration based solely on an internal defect or instability. In other words, objects (your goods) have internal vice if they have an intrinsically self-destructive nature that makes them an obvious liability.
If the loss or damage of your shipment throughout any leg of transportation is foreseeable due to the nature of the products being shipped, your shipment may not be eligible for coverage.
In these cases, the damages that are incurred are not covered because the damage was not the result of a defect in the shipping process, but a defect in the product’s own nature.
For those businesses engaged in the sale and trade of chemical compounds, this is an important exclusion to be aware of.
2. Losses due to delay or loss of market
Often, the loss of goods and the loss of market or market value due to delayed shipment are not covered by cargo insurance plans. This is particularly pertinent to individuals who engage in the international trade of perishable goods, as losses caused by deterioration are typically not covered.
Additionally, the loss of the opportunity to take advantage of selling a specific item to a potential buyer or market is excluded because it is considered a standard business peril.
3. Latent defects of product
Latent defects are a common exclusion that is considered “beyond the carrier’s control.” These are damages or losses that resulted not from carrier negligence but from the low quality of the goods themselves, attributed to the manufacturer and not readily apparent upon inspection.
The furniture industry is one sector that is commonly affected by this exclusion.
For example, if a piece of furniture is improperly manufactured or the result of poor production standards, it may suffer cracks or other defects during the shipping process.
However, this damage is not considered the fault of the carrier, as it predates the carrier’s involvement with the product.
4. Unexplained losses and shortages
Cargo insurers cannot extend coverage to any of the vehicles that are owned, leased, or operated by the party that has acquired the insurance coverage. This includes losses, damage, or shortages that occurred once the products have been transferred to the insured party’s trucks, vans, or other vehicles.
Often, this occurs in the form of property theft or theft of a vehicle that resulted from improperly securing the vehicle.
The fine print
The possibility of exclusions does not mean that obtaining cargo insurance for your international shipment is unnecessary: it is. Cargo insurance reduces your business’ liability in the loss or damage of cargo to the deductible and ensures that you’ll recover your damages in full.
These common exclusions and exceptions are simply a few points that shippers should be aware of when purchasing insurance to guarantee the maximum financial return for their goods.
Always check your bills of lading and commercial invoice for a cargo exclusion.
The freight broker agents at Asiana USA are available to help you navigate cargo insurance and find the most advantageous coverage for your needs. Our freight forwarding company also helps you choose the best transportation services for your goods so they arrive at their final destination safely and in a timely manner.
We take the transportation of goods seriously and have years of experience in international logistics, customs clearance and dealing with exclusion clauses.
Contact us for international shipping solutions, custom container solutions, and competitive shipping freight rates tailored to your business’ needs.
