What Does Shipping Insurance Cover, Doesn’t Cover And How To File A Claim

Content:

1. What does shipping insurance cover?
2. What is not covered by shipping insurance?
3. How to file a claim for shipping insurance

 

Shipping insurance, also known as cargo insurance, provides coverage for various risks and potential losses that may occur during the transportation of goods.

It helps ecommerce business owner protect yourself from unexpected situations and feel calmer during delivery of your goods, including Amazon FBA shipping.

 

Please reference our previous article how to send products to Amazon FBA for more information on sending products to Amazon.

 
 

What does shipping insurance cover

 

So, what does shipping insurance cover? The specific coverage can vary depending on the terms and conditions of the insurance policy, but generally, shipping insurance covers the following:

 

Loss or Damage

The primary coverage is for the loss or damage of goods during transit. This includes situations where goods are lost due to accidents, theft, fire, natural disasters, or other unforeseen events.

 

Theft or Pilferage

Shipping insurance typically covers theft or pilferage of goods during transportation. This is important, especially in situations where cargo may be vulnerable to theft at various points in the supply chain.

 

Fire and Natural Disasters

Insurance policies commonly include coverage for damage caused by fire, earthquakes, floods, and other natural disasters. This ensures that businesses are protected in the event of unexpected environmental incidents.

 

Accidents and Collisions

Coverage extends to accidents and collisions that may occur during transportation. Whether goods are being transported by sea, air, or land. Insurance helps mitigate the financial impact of accidents that result in damage or loss.

 

Customs Rejection

Some insurance policies cover losses incurred due to the rejection of goods by customs authorities. This could be due to regulatory issues, incorrect documentation, or other reasons that prevent the smooth clearance of goods through customs.

 

General Average

In maritime shipping, a general average event occurs when certain extraordinary expenses are incurred to save the entire shipment. Shipping insurance may cover a business’s contribution to these expenses, ensuring that the financial burden is shared among all parties involved.

 

Delay in Transit

Certain insurance policies may offer coverage for financial losses incurred due to delays in transit. This can include additional expenses or penalties resulting from delayed deliveries.

 

Hidden Damage

Insurance may cover hidden or latent damage to goods that is not immediately apparent upon receipt. This type of coverage is important for discovering and addressing damage that may not be visible during the initial inspection.

 

Acts of Terrorism and Political Risks

Some insurance policies provide coverage for losses resulting from acts of terrorism, political unrest, or other geopolitical risks. This is particularly relevant for international shipments that may pass through regions with heightened political instability.

 

Sue and Labor Coverage

This type of coverage reimburses the insured for reasonable expenses incurred to minimize or prevent further losses after a covered event has occurred.

 
 

What is not covered by shipping insurance?

 

While shipping insurance provides valuable coverage for various risks during the transportation of goods, it’s important to note that there are certain situations and circumstances that may be excluded from coverage. The specific exclusions can vary depending on the terms and conditions of the insurance policy, but common exclusions from shipping insurance typically include:

 

Inherent Vice

Shipping insurance may not cover damage resulting from the inherent nature of the goods being shipped. For example, if the goods are perishable or prone to damage under normal handling conditions, the insurance may not cover losses attributed to their inherent characteristics.

 

Improper Packaging

If the goods are inadequately or improperly packaged, leading to damage during transit, the insurance may not cover such losses. Proper packaging is often a requirement for coverage, and failure to adhere to packaging guidelines may result in claim denials.

 

Insufficient Documentation

Failure to provide proper documentation, such as invoices, packing lists, or evidence of the condition of the goods before shipping, can lead to claim denials. Comprehensive and accurate documentation is crucial when filing a claim.

 

Concealed Damage

Some insurance policies may exclude coverage for damage that is not immediately visible upon receipt of the goods. If the damage is discovered after the goods have been accepted, the insurance may not cover it.

 

Delay-Related Losses

Insurance may not cover financial losses resulting from delays in transit unless the policy explicitly includes such coverage. Businesses should check whether their policy includes coverage for delay-related losses.

 

Unapproved Routes or Carriers

If the goods are shipped using routes or carriers not approved or specified in the insurance policy, coverage may be voided. It’s important to adhere to the agreed-upon shipping terms and conditions.

 

Consequential Losses

Some insurance policies may exclude coverage for consequential or indirect losses, such as lost profits or business interruption, resulting from damage or loss of goods during transit.

 

Acts of War and Nuclear Risks

Insurance policies may exclude coverage for losses caused by acts of war, terrorism, or nuclear events. These risks may require separate insurance coverage or may be explicitly excluded from standard shipping insurance policies.

 

Fraudulent Acts

If the loss or damage is a result of fraudulent acts, misrepresentation, or illegal activities, the insurance may not provide coverage. Businesses are expected to act in good faith and adhere to legal and ethical standards.

 

Unauthorized Repairs or Alterations

If repairs or alterations are made to the goods without the insurer’s approval, coverage may be compromised. Unauthorized modifications to the goods may void the insurance policy.

 

It’s crucial for you as ecommerce business owner to thoroughly review the exclusions outlined in their shipping insurance policy and seek clarification from the insurance provider if needed.

 

How to file a claim for shipping insurance

 

Filing a shipping insurance claim is a process that involves providing the necessary documentation and information to the insurance provider.

Here are the general steps how to follow when filing a shipping insurance claim:
 

1. Notify the Carrier or Freight Forwarder

Inform the carrier or freight forwarder as soon as you discover any loss, damage, or discrepancy with your shipment. Timely notification is essential, and many insurance policies require you to report the issue within a specific timeframe.

 

2. Document the Damage or Loss

Take detailed photographs of the damaged goods or any visible signs of loss. If possible, document the condition of the goods before they are shipped, as this can serve as crucial evidence when filing a claim.

 

3. Retain Packaging Materials

Keep the original packaging materials, including boxes, wrapping, and any other materials used for packing. These materials may be inspected as part of the claims process to assess whether proper packaging was employed.

 

4. Review Your Insurance Policy Terms

Thoroughly review the terms and conditions of your shipping insurance policy. Understand the coverage limits, deductibles, and any specific requirements for filing a claim. Adhering to the policy guidelines is essential to a successful claim process.

 

5. Gather Necessary Documentation

Collect all relevant documentation, including:

• Commercial invoice
• Packing list
• Bill of lading or airway bill
• Inspection reports
• Photos of the damaged goods
• Any other documents specified in your insurance policy

 

6. File a Claim with the Insurance Provider

Contact your insurance provider to initiate the claims process. Many providers have dedicated claim departments or online platforms where you can submit your claim. Provide a detailed description of the loss or damage, along with the supporting documentation.

 

7. Complete Claim Forms

Your insurance provider may provide specific claim forms that need to be completed. Ensure that all required information is accurately provided on these forms.

 

8. Cooperate with the Claims Adjuster

The insurance company may assign a claims adjuster to assess the validity and extent of your claim. Cooperate fully with the claims adjuster, providing any additional information or documentation they may request.

 

9. Wait for Claim Approval

After submitting your claim, the insurance provider will review the documentation and assess the validity of the claim. Once approved, you will receive instructions on how to proceed with the reimbursement or settlement.

 

10. Receive Compensation

Upon approval, the insurance company will provide compensation based on the terms of the policy. The compensation may cover the cost of replacing or repairing the damaged goods, subject to the coverage limits and deductibles specified in the policy.

 

11. And of course, learn from the Experience

Take the opportunity to learn from the claims experience. Identify any areas where improvements can be made in packaging, shipping practices, or choosing insurance coverage to prevent similar issues in the future.

 

Please remember that each insurance provider may have specific procedures and requirements for filing claims, so it’s advisable to consult the terms of your policy and communicate directly with your insurance company throughout the claims process.

 

Timely and accurate documentation is key to a smooth and successful claims experience.

 

Easy China Warehouse offers international insurance services for customers. Get consultation and learn what does your shipping insurance cover.

 

Ask our team