We analyse why it's crucial to insure your goods
In the world of logistics and transport, unforeseen events can occur throughout the supply chain: damage, theft, or loss. If you do not insure your goods, you run the risk of losing a significant portion of their value. It is a common misconception that a carrier's insurance is sufficient, but their legal liability is limited and, in many cases, does not cover the total value of your cargo. This is one of the most common situations, and we can provide an example:
Imagine a shipment of €10,000 that gets damaged; the carrier's mandatory insurance will only be able to compensate you a maximum of a few hundred euros. Adequate cargo insurance is the only guarantee to protect your assets.
Types of goods in transit insurance
There are two main types of insurance, each with a different function and beneficiary. Understanding the difference is key to making the right decision whether to rely on mandatory insurance or opt for extended coverage. These are the two existing types of insurance:
1. Mandatory Carrier's Insurance: Covers Liability, Not Value
This insurance is a policy that the carrier takes out to cover their own legal liability for damage they may cause to the goods. It is a civil liability insurance, not cargo insurance.
L.O.T.T. Insurance (National Transport in Spain)
Mandatory for all road transport carriers in Spain. Its maximum compensation is limited to €6 per kilogram of gross weight of the goods.
CMR Insurance (International Transport in Europe)
Mandatory for international transport. The carrier's liability is limited to 8.33 Special Drawing Rights (SDR), which is approximately €10 per kilogram.
2. All-Risk Insurance (Cargo Insurance): Covers the Value of Your Goods
All-risk insurance is contracted directly by the owner of the goods (the consignor or the consignee) and is the only type that protects the full commercial value of your cargo.
Coverage
It covers practically any risk of physical loss or damage to the goods (accidents, theft, fire, etc.), from the moment they are loaded until they are delivered. It only excludes very specific risks such as war or shipper's negligence.
Benefit
In the event of a claim, you will receive compensation for the total value of your goods, without the weight limitations of the carrier's insurance.
What factors influence the price of your insurance?
The cost of your cargo insurance is calculated based on a series of key factors to offer you a tailor-made policy:
Value of the Goods:
The declared value of the cargo is the main factor.
Type of Goods:
Whether they are fragile, perishable, or hazardous.
Transport Route:
The origin, destination, and complexity of the route influence the risk.
Mode of Transport:
Road, sea, or air.
Typically, transport companies themselves offer clients the option to extend insurance coverage. Therefore, it is important to check both coverage and costs before undertaking transport. Here are the most frequently asked questions about transport insurance:
Who should take out cargo insurance?
Generally, the owner of the goods (consignor or consignee) should, to protect their investment.
Is all-risk insurance mandatory?
No, but it is highly recommended for any valuable goods.
Does my transport insurance cover delays?
Most policies do not cover delays, but there are additional clauses that can cover consequential losses due to delay.
Types of goods in transit insurance
L.O.T.T. Insurance (Spain)
Covers the carrier's liability for damage or loss during national goods transport.
CMR Insurance (Europe)
Covers the carrier's liability for international road shipments according to the CMR convention.
All-Risk Insurance
Protects the total value of goods against damage, loss or delays during transport.