Cargo insurance in international transportation is essential, but surrounded by myths and misunderstandings. This article focuses on clarifying these myths with specific examples and providing a detailed guide on key considerations when choosing insurance, helping professionals make informed decisions.

Myths and Realities

Myth #1: "'All risk' insurance covers any eventuality"

Although broad, this coverage is not absolute. For example, a carrier with a load of electronics might think that their 'all risk' insurance will cover any damage, but if the damage results from inadequate packaging, it may not be covered. 'All risk' policies often exclude risks such as defective packaging, delays, or losses inherent to the nature of the merchandise.

Myth #2: "Goods are safe if they are in a sealed container"

Although a sealed container offers a layer of security, it does not guarantee protection against all risks. Risks such as moisture, extreme temperatures, or rough movement during transportation can cause damage to the cargo, even within a container. Therefore, it is essential to have insurance that covers these specific risks.

Myth #3: "The cheapest insurance is sufficient"

Opting for the cheapest option may result in inadequate coverage. For example, a company transporting heavy machinery might opt for inexpensive insurance that does not cover specific damages related to the weight or size of the cargo, which could result in significant financial losses if an incident occurs.

Key Considerations When Choosing Insurance

Type of Merchandise

It is crucial to select insurance that covers the risks associated with the type of merchandise being transported. For example, the transportation of chemicals requires coverage addressing risks such as spills or contamination, while the transportation of luxury goods may require insurance covering theft or handling damage.

Incoterms

Understanding Incoterms is fundamental. In the case of DDP (Delivered Duty Paid), the seller assumes all risks and costs until the merchandise is delivered to the buyer, requiring broader insurance coverage compared to terms like EXW (Ex Works), where the buyer assumes most of the risks and costs from the beginning.

Route and Mode of Transportation

The selection of insurance should consider the route and mode of transportation. For example, a route that passes through areas with a high incidence of maritime piracy will require specific coverages against this risk. Similarly, air transportation may require insurance covering risks related to altitude and pressure changes.

Specific Coverages and Exclusions

It is vital to read and understand policies in detail. For example, if a company exports goods to a region prone to political conflicts, it should ensure that its insurance covers losses or damages caused by such risks.

Cargo Valuation

Ensuring that the cargo is properly valued is essential to avoid underinsurance. For example, if the cargo is undervalued, in the event of a claim, the indemnity may not cover the full extent of the loss.