Protecting Your Freight with Shipper's Interest Insurance

Posted by Harriet Mills on Nov 4, 2020 9:13:14 AM

Why Do I Need Shipper's Interest Cargo Insurance? 

What is the first question you ask when the unexpected happens and you are facing lost, stolen or damaged freight? For most shippers, it is … “Am I covered?”

 

You know you need to file a claim, but first comes the headache-inducing, fact gathering chore that is necessary with any accident or loss. You need answers to: Is everyone okay? How much damage is there? Who is responsible? What will insurance cover? Who is at fault? How much will it cost my company in time and lost revenue? What do I do next?

insurance policy

When facing these freight claims issues, the time it takes to deal with unpaid and unresolved problems is costly for your company in more ways than you think. No matter what disaster comes your way, being prepared and knowing how to take care of it quickly will let you get back to your main business of conducting business.

 

Frequently Asked Questions

What is shipper’s interest cargo insurance?

Shipper’s interest cargo insurance is obtained by shippers to ensure that value of goods being transported is protected from potential losses. It pertains to both physical damage and theft and can be purchased for vessel, road, rail or aircraft.  It is a first party insurance product, therefore, the cargo owner is reimbursed for their covered losses directly by the insurance company. Shippers often obtain this type of coverage as a “backup plan” for instances in which the claim is denied by the motor carrier or the motor carrier’s insurance company. Shippers interest insurance is used to reduce the gaps in coverage and is paid for by the shipper.  

 

Why should I get shipper’s interest cargo insurance?

  • As a shipper, you will be compensated should a loss occur
  • Claim handling is simplified
  • Insurance brokers have volume buying power: purchasing coverage becomes economical and simple
  • You have experts in your corner should a dispute arise

Shipper’s interest cargo insurance is especially recommended for freight that is considered high value or high risk. It is also a prudent safeguard in instances when the amount of carrier’s liability insurance is far below the value of the goods being shipped. If you are not sure if it makes sense to purchase shipper’s interest cargo insurance, consult with a reputable insurance broker, such as Avalon Risk. They can explain the many options and can customize a policy that is affordable and beneficial for your company. There is no one-size-fits-all when it comes to cargo insurance. It all depends on the policy you create.

 

Don't motor carriers already cover my shipment for loss or damage of my freight?

All motor carriers have some sort of declared value or carrier’s liability insurance, neither of which is a guarantee of coverage for the full replacement costs of your stolen or damaged goods. For some freight, a carrier’s liability insurance is adequate, but shipper’s interest cargo insurance will provide additional coverage adding peace of mind when it may be needed most. This added coverage can include things like concealed damage, perishable and time-sensitive products, and even expedited services. Every policy is different and can be customized by a reputable freight insurance company depending on the shipper’s needs.

 

If the value of the shipment exceeds $100K, then you should consider Shipper's Interest insurance. 3PLs like Choptank can obtain this excess insurance for you as a convenient value-added service or you can go directly to a freight insurance broker.  

 

What information is needed to put together a customized quote?

The following information will help your insurance agent get you the best quote for your freight:

  • Details regarding your company's operations regarding kinds of freight, their origins and destinations, before and after loading, wait times and clearance, especially if the distances are long. 
  • Primary factors pertaining to the freight's vulnerability, such leakage, breakage, spoilage, heat or cold damage, theft, or other circumstances.
  • Any special or unusual requirements.

 

How much is it really costing my business?

Unresolved and unfiled freight claims can add up. What may seem like a nominal amount can chip away at your bottom line, particularly when you have multiple 'insignificant’ claims.

 

When you consider the time involved in reporting, documenting and resolving freight claims, you realize just how much the loss is costing your company. There is paperwork to fill out, inspections to be made, follow up phone calls, replacement freight to be ordered, and often storage and disposal costs to deal with that are related to the damaged goods.

 

The best approach to shopping for shipper's interest insurance is to get quotes from more than one reputable insurance broker. Because there are so many options and variables policy by policy, be sure when you review the final quotes you are comparing apples to apples. It can save you bushels!  

 

Tags: Shipping Truckload, Freight claims