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Why You Should Have an Open Cargo Insurance Policy


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There are five (5) insurance options for shippers to insure their cargo shipments.

Deciding which option is the right one for a shipper is an important decision which should be carefully thought out and reviewed on a regular basis.

How you secure insurance for your cargo can make a significant difference in the cost of the protection and the terms of the coverage that you receive. Here is a brief discussion of those options with the key points of comparison:

(1) Insurance can be obtained through a freight forwarder or customs house broker. Most of these companies have an in-house ocean cargo policy that is made available to their customers. This is a significant profit center for these companies due to the high mark-up charged to the shipper. These “all purpose rates" can be much higher than the rates for your specific shipment. Despite these issues, this is the preferred option for the small shipper with four or five shipments per year. Due to the minimum premium required for an “Open Cargo" Policy, this may be a more economical way to purchase coverage. But if a shipper does enough volume, the savings could be up to 50% of what he is currently paying.

(2) Insurance could be secured through the carrier shipping the cargo. Unfortunately, this makes the carrier the named insured, not the shipper. This protects the carrier not the shipper. If there is a loss, the shipper will need to file a liability claim against the carrier and their insurance company. And the insurance company will seek to protect the interests of their client, the carrier, not the shipper.

(3) Overseas suppliers might provide the coverage for YOUR cargo. This arrangement raises a number of significant questions. “Will the coverage be placed with a U., or will you have to collect on a claim in a foreign company?" “What perils are covered by the policy (All-Risk vs. Named)?" “What language is the certificate written in?" “Will you be paid in dollars or some other currency?" “Is the cost of the insurance passed on to you and if so, at what cost?" “What is the deductible?" “What are the exclusions and conditions of the coverage?" “At what point does the insurance coverage cease to cover your cargo?" Do not let the supplier make YOUR business insurance decisions. Do not relinquish control!

(4) Occasional shippers can purchase a Shipment Certificate. Although this is a more expensive way to buy coverage, it may be to be the most economical and efficient method for the small shipper.

The cost of cargo insurance is small in comparison to the total cost of packing, handling, and shipping goods. Bypassing the middleman (freight forwarder, customs house broker, overseas supplier) can yield a huge savings in the cost of your shipping. You will be the insured. You will know what you are getting. You will have the right coverage to meet your specific needs. Your interests will be protected, not the middleman's interests. If you should have a claim, you are the insured and the insurance company who issued the policy has a vested interest in handling the claim promptly and fairly. Your shipments will be automatically protected with no chance of failing to insure a shipment. You will have a single point of contact for all of your cargo issues rather than having to deal with multiple coverages with different terms of coverage from different sources. You will be free of “GENERAL AVERAGE" claims. And if you don't know what that means, you need to understand this point before you have a major surprise.

You know that you need cargo insurance or you will recover very little for damaged goods. The question is, “Where are you going to get it?" The answer is at M. Silver and Associates, Inc.

If you have a question about cargo insurance or your need for cargo insurance, contact our cargo department by e-mail at To receive a cargo insurance quote, please download our Open Cargo Insurance Questionnaire.

Merle Silver, President of M. Silver and Associates, Inc. , is ready to help you with a cargo insurance quote or information on other marine insurance coverages. Please visit Your Florida Insurance Agents for additional information on our agency.


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