Take Note: Shipping Concerns for Freight Forwarders
Who needs contingent cargo coverage? In the transportation and logistics sector, freight brokers carry contingent cargo insurance to pay for any claims that the carrier declines. Groups called managed risk clubs often underwrite cargo insurance, which is intended to cover almost every possible risk.
In the event that the manager risk club denies payment on a claim for any loss or damage to a shipper’s cargo, the shipper will then demand that the freight forwarder or freight broker make good on the loss. Having a contingent cargo policy in effect helps to pay or protect against these claims. Keep in mind that while not strictly liable, the forwarder’s reputation could suffer immense damage if he or she is unwilling to make good.
What contingent cargo insurance specifically covers
Contingent cargo coverage includes most common causes of loss, for example, any resulting damage and/or theft while goods are in transit. It also covers the loss of any cargo on many types of common carrier, including truck, rail or ship. It will even cover common losses associated with travel by rail or ocean, such as instances when the ship sinks with the cargo aboard or in the event of a train wreck.
One type of loss in ocean shipping where a contingent cargo policy is considered essential is known as “general average.” In cases where the crew deems it necessary to jettison cargo in order to save the ship from going under, the insurer generally winds up charging the loss of all, or any portion thereof, of any one shipper’s cargo back to all the shippers.
Unfortunately, ocean freight is known to travel on ships registered in countries where safety, manning and vessel condition often go unregulated. In order to protect their own interests, shippers should ensure that their freight forwarder carries contingent cargo insurance before entering into an agreement for the carriage of their cargo as ocean freight.
Freight forwarders know the importance of providing security and peace of mind to their customers, and invest in this coverage, which offers just that.