With cargo insurance you can insure goods upon their transport from point A to point B. This protects the interest of the owner of the goods in a situation where the carrier is not required to compensate for damage or their liability is limited. The interest of the road carrier or freight forwarder is protected by their liability insurance.
The owner of goods should take out cargo insurance when the actual value of goods is greater than the product of the weight of the goods and the liability limit of the road carrier or freight forwarder (weight of goods x 8.33 SDR).
Cargo insurance is mostly used for insuring goods which are the object of a contract of purchase and sale. A cargo insurance contract should be entered into by the party to a contract of purchase and sale (purchaser or seller) who bears the risk of damage to, or destruction, or loss of goods according to the delivery terms.
There are two ways to cover either a Single Cargo Insurance Policy for a single shipment or a Long-term Cargo Insurance Policy or the so-called open cover policy normally for a term of one year for several cargo shipments.
Cargo Insurance provides coverage for cargo loss or damage arising from the causes such as:
elemental forces, etc.
Insurance can be effected against all risks or against a specific risk. An insurance contract is signed in accordance with the Institute Cargo Clauses of the Institute London Underwriters.