Forms of cargo insurance in international logistics
In international cargo transportation, insurance is an important tool to protect businesses from financial losses. Damage to goods, accidents, natural disasters, errors in congestion or transport delays can lead to significant losses.
Various forms of cargo insurance are used to manage these risks. In practice, the most common one-time and general-contract.
These tools are actively used in international trade and logistics, including in the work under the rules. n Incoterms 2020The International Chamber of Commerce.
One-time insurance policy
One-time policy is issued single-carriage. It operates only within the specified route, the volume of cargo and a specific consignment of goods.
As a rule, such a policy is issued:
- upon single export or import supplies
- upon single-purchase
- upon project
- When the company is not engaged in regular logistics
The insurance policy prescribes the main parameters of transportation:
- sender
- delivery
- transport
- cargo
- coverage
- period
After completion of transportation, the policy is terminated.
The main advantage of this format - ease of design. The company insures only a specific supply and does not assume long-term obligations.
However, with regular deliveries, the issuance of a separate policy for each transportation may become time-consuming.
General insurance contract
General Insurance Contract (often referred to as general-polis) used by companies that regularly transport goods.
Such a contract shall be periodmost often one-yearand extends to all transportation of the company during this period.
As part of the general agreement:
- fixed basic conditions of insurance
- set up coverage limits
- prescribed types of goods transported
- determined geography and transport routes
Each individual shipment is simple declared under the existing agreementNo need to apply for a new insurance policy.
Advantages of the General Contract
For companies working with regular deliveries, the general contract has several important advantages:
1. Saving time
No separate policy is required for each delivery.
2. Document facilitation
All shipments are made under one insurance agreement.
3. Better rates
Insurance companies often offer lower rates with long-term cooperation.
4. Flexibility
Possibility to insure different types of cargo and routes under one contract.
When to choose a single policy, and when the general policy
The choice of insurance depends on the nature of the company’s logistics.
A one-time policy is usually suitable if:
- transportation rarely
- is one-off
- The company is just beginning to work with international logistics.
General contract is more often used by companies that have:
- regular importation
- regular suppliers
- stable logistics routes
- monthly
For large logistics operators and importers, general insurance is standard practice.
Cargo insurance - One of the key elements of risk management in international logistics.
The choice between a one-time policy and a general contract depends on the frequency of transportation and the scale of the business.
Companies with episodic deliveries are more likely to use one-offWhile regular participants in foreign trade prefer general treatiesIt allows to simplify insurance of all transportations during the year.
A well-chosen form of insurance helps reduce risks, simplify work with transportation and protect the financial interests of participants in foreign trade transactions.
