A Guide to Freight Shipping Insurance: What You Need to Know

Shipping freight always comes with risks, whether it’s loss, damage, or even theft of your goods in transit. As your business expands, so do the potential losses and cost in case something goes out of hand. To safeguard your business from such risks, acquiring freight insurance is a vital step.

What is Freight Insurance?

Freight insurance provides additional coverage for your shipments beyond what your carrier’s liability offers. It serves like a safety net, protecting your cargo from damage, loss, or theft while in transit. Whether it's road transport or several shipping methods, freight insurance ensures that if your goods are compromised, you’ll be compensated based on your policy.

Carrier Liability vs. Freight Insurance

Once your goods leave your premises, the shipping company takes on responsibility for safeguarding them. Carrier liability refers to the level of responsibility the carrier assumes during transport or storage. If your shipment is stolen, damaged, or lost, the carrier will cover the cost up to a certain amount, known as the carrier's maximum liability. This coverage highly depends on factors like transportation mode, freight class, and the type of goods being shipped.

Freight insurance, on the other hand, provides coverage beyond the limits of carrier liability. If the loss or damage exceeds the carrier’s coverage, your freight insurance comes into play to cover the difference, ensuring you’re fully protected.

What Does Freight Insurance Cover?

Freight insurance policies can cover a variety of risks, including:

● Loss of goods

● Theft during transit

● Physical damage from mishandling or accidents

● Non-delivery of items

● Infestation or government seizure

Not all freight insurance policies are the same. Some may cover specific risks like natural disasters, while others exclude certain events like delays caused by weather. It's essential to review your policy to ensure it covers the risks that are most relevant to your business.

Common Exclusions in Freight Insurance

Certain scenarios are often excluded from freight insurance, such as:

● Poor packaging or labeling

● Normal wear and tear

● Delays in shipment or delivery

Additionally, specific goods may not be covered, including:

● Firearms and ammunition

● Precious metals and gemstones

● Artwork and antiques

● Electronics or pharmaceuticals

Reviewing the exclusions in your policy helps you avoid any surprises and allows you to tailor your insurance coverage to your specific needs.

Types of Freight Insurance

There are several types of freight insurance policies available, each designed to address different levels of risk:

● Basic Coverage: Limited protection, covering specific risks like accidents or natural disasters.

● Named Perils Coverage: Covers specific hazards outlined in the policy, such as damage from storms but not flooding.

● Broad Coverage: Offers more protection than basic coverage but with exceptions for certain items.

● All-Risk Coverage: The most comprehensive, covering almost any external cause of damage or loss.

● Total Loss-Only Coverage: Covers the entire shipment only if the entire load is lost.

● Contingent Coverage: A secondary policy that kicks in when the primary insurance fails to cover the entire loss.

How Much Does Freight Insurance Cost?

Freight insurance typically costs 1-2% of the total value of your goods. However, several factors influence this cost:

● The level of coverage you select

● The value of the goods

● The risk of theft or damage

● Shipping routes and distances

● The shipping carrier’s track record

All-risk coverage is the most expensive but offers the most protection. Basic or named perils coverage is more affordable but offers limited protection. Ultimately, it’s up to you to decide which policy works best based on your budget and the value of the items you’re shipping.

The Importance of Freight Insurance for Your Business

Depending solely on carrier liability coverage can be a costly error, as it often fails to fully cover the value of your shipment. Freight insurance offers additional peace of mind by ensuring that your business is protected from unexpected losses. Freight insurance serves as a vital safeguard, filling the gap between the carrier's liability coverage and your financial protection, whether you're shipping high-value items or delicate goods.

How to Choose the Right Freight Insurance

1. Review Your Carrier’s Liability: Each carrier offers different levels of liability, so it's crucial to understand what risks they pose before purchasing additional insurance.

2. Consider the Value and Risk of Your Goods: Higher-value or more fragile items might benefit from a more extensive insurance policy.

3. Compare Different Insurers: Not all insurers offer the same terms or rates. Seek a provider known for its solid reputation and consistent record of equitable payouts.

Protect Your Shipments with Asset Freight Logistics

Don't leave your business at risk. With Asset Freight Logistics, you can ensure your shipments are secure with comprehensive freight insurance solutions tailored to your needs. Whether you're shipping valuable goods or items that need extra protection, we've got you covered. Contact us today to learn more about how our shipping services and insurance options can safeguard your business. Sign up with Asset Transport now and ship with confidence!