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International Freight Insurance and Cargo Insurance are two different forms of insurance.
What is Freight Insurance?
Freight insurance is one of the many costs that will be included in your transportation quote. Crucially, shipping insurance only covers claims arising from errors or omissions on the part of the freight forwarder or logistics provider.
Difference Between Freight Insurance & Cargo Insurance
Freight Insurance
Freight insurance is a form of insurance that a freight forwarder purchases from an insurance company in order to protect its interests against losses caused by its professional responsibilities.
This type of insurance is generally designed to cover losses caused by the freight forwarder’s own negligence, errors or criminal acts, such as failing to follow the customer’s required insurance procedures.
Cargo Insurance
Cargo insurance is insurance purchased from an insurance company by a cargo owner or shipper to protect his cargo against accidental loss during transportation.
This type of insurance is generally designed to cover the loss of goods due to accidental losses such as fire, flood, theft, etc. during transportation.
Therefore, the object of insurance, insurance liability and insurance coverage of international freight forwarder’s liability insurance are different from that of cargo insurance.
Freight insurance protects you, your customers, and the value of the goods you wish to transport. Therefore, you should not rely on cargo insurance to protect the value of your shipments. Even if an act or omission by your freight forwarder causes your shipment to be lost or damaged in transit, the compensation provided by cargo insurance may only be a fraction of its value.
What does cargo insurance cover?
Freight insurance covers the freight forwarder’s liability for damage to or loss of the customer’s goods in transit. Any such damage or loss must be caused by the negligence of the freight forwarder in order for a claim to be made.
All freight insurance policies are based on the weight of the shipment. For example, in the event of a cargo insurance claim, 1 kilogram of gold will pay the same amount as 1 kilogram of paper.
How is cargo insurance calculated?
Freight insurance is calculated as a percentage of the freight forwarder’s fees. These fees are paid by the freight forwarder and passed on to the customer as a cost, which is included in the freight forwarder’s quote for the service.
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