Glossary
Cargo insurance, defined
Coverage for goods while they are being shipped, protecting the owner of the goods against loss or damage in transit by truck, rail, air or sea.
In practice
A carrier's own responsibility to a shipper is limited by contract, often to a small amount per pound, and applies only when the carrier is at fault. The shipper's own cargo policy pays regardless of fault, at invoice value plus freight, for the perils it names. It can be bought per shipment or as an annual open policy for a business that ships constantly. Exclusions commonly include improper packing, inherent vice, delay and rejection by customs. It is different from motor truck cargo coverage, which is the trucker's liability policy for the goods it hauls. Importers, wholesalers and online sellers are frequent buyers.
A worked example
Suppose a furniture importer ships a container worth $120,000 and a forklift punctures several crates at the port. The shipper's open policy pays the $18,000 of damaged goods without waiting to establish who was at fault. Hypothetical figures.
Applies to: Retail Business InsuranceCommercial Auto Insurance