A Remedy for Recovery
In the simplest terms, cargo insurance is a type of property coverage that protects the cargo owner against loss to their property when it is in transit. It is comparable to other types of property coverage such as car and homeowner’s insurance which are purchased to protect the financial interests of the owner of the vehicle or house. Cargo insurance covers against physical loss or damage from an external cause that occurs while goods are in route to their final destination. Coverage extends to an enormous number of causes of loss from theft from a parked truck enroute to the port, water damage caused by humidity inside a container, rogue waves knocking a container clean off the deck of the ship, fires caused by combustion of neighboring cargo – such as fireworks or batteries, or pallets falling off of forklifts while the goods are being loaded.
Why Cargo Owners Need Insurance?
For cargo owners involved in international and domestic trade, cargo insurance is an essential means to preserve their financial interests.
A cargo owner might reasonably expect that a carrier or warehouse operator who has custody of cargo would reimburse the cargo owner for losses to their property, but this is not always the case. Carriers such as steamship lines or airlines are not usually responsible for losses that are unforeseeable and beyond their control. For example, carriers are not commonly responsible for the following causes of loss because they are beyond their control:
- Fire, unless caused by the actual fault or knowledge of the carrier or warehouseman
- Stranding, sinking, vessel collision, or striking a submerged object
- “Aِِِct of God” – such as a lightning strike or a hurricane
- Any loss or damage inherent to the goods, such as rust or rot on unprotected metal or fruit
- And many others
In order to be compensated by a carrier for the financial impact of a loss to cargo, you must be able to prove that they are negligent. As all the television law dramas tell us, we are innocent until proven guilty, and so in a claim like this, the burden of proof falls on the cargo owner. Unless the cargo owner has insurance. An insurance claim does not require proof of negligence and has many other benefits over a claim against a cargo carrier.
by admin