There are many kinds of insurance a small business should invest in to protect its assets. This includes cargo insurance. While cargo insurance may not be discussed that often, there are plenty of very good reasons for a company to purchase this kind of coverage.
What Is Cargo Insurance?
Cargo insurance is used to protect businesses from damage that could be incurred by its products while they are being shipped to another destination. Traditionally, this was used for products as they were shipped from the manufacturer to another point in the distribution chain, such as a brick and mortar retail store. However, thanks the Internet, a large percentage of shipped products now go directly to customers. International shipping is also now a common practice.
What Are the Benefits of Cargo Insurance?
There are many things that can go wrong while a product is in transit. This can include extreme circumstances, such as a plane crashing or a ship being hijacked by pirates. It can also involve less dramatic examples, such as the shipping crew damaging a pallet of products when putting other products into the back of a truck. Coverage can depend on the terms of the insurance. However, in general, it protects businesses from damage done to their products due to shipper negligence or other factors out of their control.
How Is Cargo Insurance Sold?
In most cases, cargo insurance is purchased in tandem with the shipping service and related fees. For example, paying a certain amount for cargo insurance may be part of the overall deal agreed to with an importer for shipping a company’s goods to another country via cargo boat. With certain shipping companies, however, cargo insurance may be optional.
What Are the Benefits for Small Businesses?
With larger companies, the damage incurred by losing a few pallets of products during shipping may be minimal. It may cost hundreds or even thousands of dollars, but this is only a small blip compared to the kind of business large national and international brands do on a daily basis.
For small businesses, the damage done could be far more severe. Smaller companies ship far less than large businesses. Thus, losing the same amount of products due to negligence or shipping problems could badly damage a small company’s reputation and bottom line.
Cargo insurance protects against this risk, and should be considered a worst-case protective measure, in addition to some preventative shipping practices. Specially engineered cargo containers, TV monitor shipping cases, and padded crate dividers have all been developed to protect their contents during shipping. Investing in high-quality shipping equipment is as important for protecting your products as cargo insurance.
Cargo insurance is something that any wise entrepreneur should consider investing in. It can make sure you get your money back if your products are indeed damaged during transit.