Marine Cargo Insurance
Why Do I Need Cargo Insurance?
Without marine cargo insurance, importers don’t have any real protection if their containers are damaged or lost in transit.
- December 2020: the ONE Apus loses upwards of 1900 containers at sea due to inclement weather. Thousands of containers on board are damaged. Estimated losses = $200M.
- January 2021: 750 containers fall off the Maersk Essen and are lost at sea.
- March 2021: the Evergreen ship “Ever Given” is blown off course and blocks traffic in the Suez Canal for an entire week. The vessel’s owners declare what may be the largest General Average (GA) in history.
(A General Average is a provision of maritime law that spreads the losses incurred across all cargo owners with freight on board, and all parties must pay a set amount for their cargo to be released, regardless of whose cargo was lost or damaged and at what cost.)
When disaster strikes, damage or loss to a container or ship can have devastating consequences for businesses relying on those goods to arrive safely, and carrier liability does little to mitigate the costs.
Note: As cargo vessels continue to increase in size, so do the resulting catastrophes. And some are finding correlations between the size of these massive ships and disasters they encounter.
Carrier Liability vs. Cargo Insurance
…like the difference between a car warranty and auto insurance
In these situations, carrier liability is nowhere close to being enough to cover costs. Cargo lines typically offer rates per pound that amount to vastly less than the cargo’s actual worth.
Did you know that carrier liability does not cover damages caused by natural disasters?
Depending on how your bill of lading or airway bill is worded, your total reimbursement—if the situation even involves carrier liability—may be limited to a maximum of $500 per ocean container (or $9.07 per pound for an air shipment) in the case of a loss.
Similar to comparing a car warranty vs. auto insurance, carrier liability has to do with the responsibilities of the shipping line and is not intended to provide importers and exporters with actual coverage.
What Does Cargo Insurance Cover?
Cargo insurance offers protection from external damage during transit—of one’s own cargo or in the case of a General Average (GA) claim.
C J can provide you with reasonably priced cargo insurance policies based on the value of your freight.
If you have any questions about marine cargo insurance or would like to receive a quote, please contact your local C J International representative.
Our blog posts are for informational purposes only. While we use reasonable efforts to furnish accurate information, C J is not liable or responsible for the accuracy or reliability of any information contained herein.