Recent disruptions like the Suez Canal blockage, Panama Canal droughts and the Baltimore bridge collapse have exposed the fragility of global supply chains. These incidents highlight the close links between land and sea transportation networks, stressing the need for strong risk management strategies.

Shippers are proactively seeking ways to minimize the impact of such events on their operations, especially their finances. One effective solution is Shipper’s Interest Insurance. This insurance policy offers coverage beyond carriers’ limited liability, providing peace of mind for shippers.

What is Shipper’s Interest Cargo Insurance?

Shipper’s Interest Insurance is a tailored form of coverage designed to protect shippers’ financial interests in case of loss or damage to their cargo during transit.

Unlike traditional cargo insurance, which is typically purchased by carriers to cover their legal liability, Shipper’s Interest insurance is primary and pays out immediately if a cargo claim arises. It covers the full value of the cargo, not just the minimal compensation that carriers usually provide. Whether the shipment is by ground, air or ocean, this insurance ensures the shipper’s investment is protected.

Consider a shipment of 56,000 pounds of oranges that spills onto the highway. Without Shipper’s Interest Insurance, the carrier’s liability might only cover $0.50 per pound, totaling $28,000. But if the oranges were invoiced at $1.50 per pound, the loss is $84,000. With Shipper’s Interest Insurance, the shipper gets the full $84,000, no matter who’s at fault. Relying only on carrier coverage leaves the shipper short by $56,000.

What is Insurable?

All types, values and sizes of cargo can be insured for their full commercial invoice value plus transportation costs if “all risk” coverage is chosen. However, certain commodities and specific origins or destinations may require additional review and approval prior to shipping due to higher risks of loss, theft or commercial value exceeding industry standards. Additionally, factors such as packing quality, inherent vice and the adequacy of blocking and bracing within the container can affect the insurability of various types of cargo.

Who is Responsible for Obtaining Insurance?

Incoterms 2020, which define the risks and responsibilities for buyers and sellers in international transactions, mention Shipper’s Insurance in only two terms: Cost, Insurance and Freight (CIF) and Carriage and Insurance Paid To (CIP). For all other Incoterms, the buyer and seller need to decide during negotiations who will be responsible for obtaining Shipper’s Interest Insurance. It is important that all international cargo is insured by either the buyer or the seller.

Why Purchase Shipper’s Interest Insurance?

1. 1. Certainty and Assurance: Shipper’s Interest Insurance offers shippers certainty over the safety of their cargo. By opting for this insurance, shippers can avoid relying solely on the carrier’s limited liability, which can be insufficient and complex to claim against.
2. 2. Emergency Protection: In the unfortunate event of a General Average, where parts of the ship or cargo are sacrificed to save the rest in an emergency, Shipper’s Interest Cargo Insurance protects the financial interests of the cargo owner.
3. 3. Simplified Claims Handling: Dealing with claims through overseas insurers can be daunting due to differences in legal systems, languages and time zones. Shipper’s Interest Insurance provides local claims handling, streamlining the process and making issue resolution quicker and easier.
4. 4. Economical and Practical Investment: Despite the upfront cost, investing in Shipper’s Interest Insurance is an economical choice. The potential savings in the event of a loss outweigh the expense, providing a wise investment for cargo owners. By opting for Shipper’s Interest Insurance, cargo owners can mitigate risks, streamline claims processes and ensure their financial interests are protected.

Shipper’s Interest Insurance by Shipping Mode

Understanding cargo insurance coverage based on shipping mode is crucial for securing complete coverage. Here’s how Shipper’s Interest Insurance can benefit various shipping methods:

• Truckload Cargo Insurance: For shipments exceeding $100,000 in value, obtaining Shipper’s Interest Insurance is a smart move. By informing both the carrier and the third-party logistics provider (3PL) in advance, you can secure additional coverage beyond the carrier’s standard liability. This added protection ensures extra coverage for high-value truckload shipments.
• Less-Than-Truckload (LTL) Cargo Insurance: Shipper’s Interest Insurance provides added protection for LTL shipments exceeding $50,000 in value. Understanding the National Motor Freight Classification (NMFC) helps determine the carrier’s liability. Ensure the carrier’s coverage aligns with your goods’ value to ensure adequate protection. Shipper’s Interest Insurance fills any potential coverage gaps, offering complete protection for LTL shipments.
• International Cargo Insurance: For international shipments by ocean or air, Shipper’s Interest Insurance is a valuable addition. Work closely with your freight forwarder to get this added coverage. You’ll need to give detailed shipment info for the insurance. By providing these specifics, you can guarantee appropriate protection against potential risks like damage, loss or theft during transit.

Shipper’s Interest Insurance is an essential safeguard for anyone involved in the shipping of goods. It offers certainty, protection and an economical solution to managing risks associated with transporting cargo. By ensuring that all financial interests are covered, shippers can focus on their core business without the constant worry of potential losses.

The Ascent Advantage: Navigate Shipper’s Interest Insurance with Ease

At Ascent Global Logistics, we partner with top insurance companies to offer comprehensive Shipper’s Interest Insurance coverage. Our team works closely with customers to assess their unique needs and risks, tailoring insurance solutions to protect their valuable cargo against unforeseen events such as damage, loss or theft.

Alongside insurance services, we provide customs brokerage and trade compliance services to support international logistics needs. Our experts help navigate complex regulations, ensuring cargo is protected and supply chains are optimized for success.

Get started with Ascent and experience seamless and secure logistics solutions.