Types of Insurance for International Freight Transport

Types of Insurance in International Cargo Transportation

With the increasing prosperity of global trade, international cargo transportation has become a vital means of economic exchange among countries. However, during transit, goods may face various risks such as natural disasters, theft, fire, and transport vehicle malfunctions. To protect the interests of cargo owners, international cargo transportation insurance has emerged accordingly. This article will introduce the different types of insurance available in international cargo transportation, and analyze their features and applicable scenarios.

I. Basic Risks

Basic risk insurance is the most common type of coverage in international cargo transportation. It mainly includes Free from Particular Average FPA, With Particular Average WPA, and All Risks.

1. Free from Particular Average FPA

This policy covers losses caused by natural disasters and accidents during transportation. However, it excludes liabilities arising from intentional acts or negligence by the insured.

Features Lower premium, relatively broad coverage, suitable for most cargo shipments.

Applicable Situations Ideal for low-value goods that are vulnerable to natural disasters or accidental damage.

2. With Particular Average WPA

In addition to the coverage provided under FPA, WPA also covers partial loss of cargo due to specific perils.

Features Moderate premium with expanded coverage compared to FPA; suitable for goods of higher value that require protection against partial loss.

Applicable Situations Suitable for goods with moderate to high value, especially those at greater risk of partial damage.

3. All Risks

This policy covers all risks except those specifically excluded in the policy terms, including both natural and man-made risks.

Features Broadest coverage with a relatively higher premium; ideal for cargo owners who demand high-level security for transportation.

Applicable Situations Appropriate for high-value goods or those highly sensitive to transportation risks.

II. Additional Risks

In addition to basic risks, there are many optional additional coverages available in international cargo insurance. Commonly used additional risks include Theft, Pilferage and Non-Delivery TPND, Fresh Water and Rain Damage, War Risk, and Strike Risk.

1. Theft, Pilferage and Non-Delivery TPND

This policy covers losses due to theft or disappearance of goods during transportation.

Features Moderate premium; suitable for goods of higher value that require enhanced security.

Applicable Situations Ideal for cargo owners seeking protection against theft or loss.

2. Fresh Water and Rain Damage

This policy covers damage caused by exposure to fresh water or rain during transportation.

Features Low premium; suitable for low-value goods that are particularly vulnerable to water-related risks.

Applicable Situations Appropriate for goods sensitive to water damage, especially those of lower value.

3. War Risk

This policy covers losses resulting from war or military actions. Compensation under this policy is not guaranteed in all cases and typically requires proof that the loss was directly caused by war or military activity.

Features Higher premium; suitable for cargo owners operating in conflict-prone regions.

Notes Insurers usually impose strict conditions and limitations when offering war risk coverage.

These are some of the commonly used additional insurance options along with their features and suitable applications. There are also other specialized coverages available, and cargo owners should make comprehensive evaluations based on the nature and value of their goods.

Choosing the right insurance type and coverage level is crucial for ensuring the safety of goods during transportation. When selecting an insurance provider, cargo owners should carefully read the policy terms, understand their rights and obligations, and ensure their interests are fully protected.