If you're a manufacturer relying on transportation service companies to deliver your cargo to customers, then you know how important insurance is. Commercial cargo insurance policies differ widely depending the weight that each insurer puts on various factors, such as:
- The type of transportation service requested
- The coverage purchased
Given the high risks associated with their customers' sectors of activity, cargo insurers have no option but to set high rates for the policies they sell. Understanding what your coverage entails is essential when shopping for policies. Here are a few things you need to know.
What kind of insuring agreement do you have?
In general, cargo insurers offer two forms of insuring agreements:
- Named Perils
As you might know, the second form of insuring agreement only provides protection against the events that are listed in the policy you purchased. Although theft is typically included in most commercial cargo insurance policies, it may exclude certain events that the insurer considers uncommon. For instance, if you realize that drivers stole some of your merchandise items, you'll likely not be reimbursed unless you chose the first form of insuring agreement, or if you listed driver theft under Named Perils.
What are the endorsements?
While it's essential to ensure that your cargo is properly insured against various events, it's equally important to pay attention to endorsements before choosing a cargo insurer. Put in simplest terms, endorsements give insurance providers the ability to modify the coverage policyholders are paying for. This means that your cargo insurer may decide to cancel, expand, or restrict your protection while it's still active.
For example, depending on what is specified on the insurer's endorsements, you may find out that a theft event that takes place because the driver failed to meet certain security rules will make you ineligible to claims. Another example is if damage was inflicted to the cargo because the driver left the truck unattended.
One way to look at endorsements is by understanding that they can either extend or restrict the limits of your cargo insurance policy.
When shopping for cargo insurance, take the time to develop a thorough understanding of the policies that are being offered to you. The last thing you want is see your claim be denied and have to absorb the incurred financial losses. An optimal decision would be to choose an insurer that has experience in your sector of activity.