Cargo Insurance – Is Your Shipment Covered?
We are constantly fielding questions about the insurance and safety of components in transit, we thought it might be beneficial to discuss insurance in our next article.
For those of you still reading after the use of the word “insurance” in the opening of this article, rest assured we will attempt to make this post as exciting and interesting as insurance can possibly be.
Bottom line, insurance is expensive. But in the risk-adverse society that we live in, it is absolutely necessary. You can literally insure anything, for a price of course. Gene Simmons has insured his tongue for over a million dollars, and if British comedian Rich Hall can insure his sense of humour, well then we would think the sky is the limit on this one.
Want to see some other ridiculous things you can insure? Check out this link: //www.nuffy.net/articles/read/most-bizarre-things-insurance-can-cover.html
What many people don’t realize is that normal carrier’s liability is $2 per pound of cargo. While this makes sense on general commodity shipments such as steel or lumber, the amount of insurance compared to the value of the cargo can become majorly disproportionate when you start moving high value aerospace components.
For example, if you were going to ship an AS350 helicopter, you would be looking at around 5200 lbs of cargo. A normal carriers liability being $2 per pound means they would be responsible for the first $10,400 of damage, after which they are no longer liable for damages.
As you know, 10K of insurance is a mole hill compared to the three million dollar mountain that is the approximate value of this helicopter. I don’t even think it is possible to damage a helicopter without spending at least 10k to fix it, even for the smallest ding on a riveted panel.
No need to panic though, for the most part companies that are shipping high value aerospace components are aware of the risk and have heavily insured their items even in cases of a total loss.
However, are you aware that if you do not declare the value of your cargo on the Bill of Lading, your carrier is only responsible for $2 per pound? This applies to anything you have ever shipped. This is why it is important to talk to your carrier about insurance and what type of policy they will offer you if necessary.
All carriers have some sort of cargo insurance that they can offer you over and above the normal carrier liability. However this is extremely expensive insurance and we estimate that 90% of carriers have less than $1 million in cargo insurance available. In fact, as far as we know IMT carries one of the highest cargo insurance policies available to ground carriers in the market, at $2.5 million with the ability to go higher if necessary.
This insurance is available to you if your insurance provider is unwilling or unable to take on the risk. Also it might be cheaper to use a carriers insurance depending on your provider. This does, however, cost money over and above the normal transportation costs. While we are often cheaper than if you were to try and insure your cargo yourself, no insurance in this world is free.
If you have successfully read through this entire article without falling asleep or vowing to live in the mountains where insurance sales people can’t reach you, congratulations, here is a picture of a panda that didn’t make it through the article: