Business Insurance: Should you consider a goods in transit insurance?
Goods are insured when they are being made or stocked, at the manufacturer’s factory, at the importer’s and exporter’s warehouses, all the way to the shop of the reseller. But are goods protected between point A and point B when they are being shipped? What happens if a shipment gets lost or damages, what if the ship sinks or if the lorries never arrive? Providing a coverage for whatever can happen during this part of the product journey is precisely what goods in transit insurance is about. How does it work and what is covered? What should interested businesses look out for when selecting a goods in transit insurance, and how much does it cost?
What is goods in transit insurance?
This type of business insurance covers basically anything which can happen during the shipment of purchased goods, in case these goods are lost, destroyed or damaged.
Principles of goods in transit insurance
Good in transit insurance insures merchandise, goods and inventory which have been shipped by a seller, but not yet received by the purchaser. In case this merchandise is damaged, destroyed or lost while being shipped, both the seller and buyer will be protected. Sometimes the seller will be made liable to provide such an insurance policy as per the contract tying him with the buyer. In any case, the contract dictates who is responsible for the goods in transit, and who should therefore subscribe to this insurance. Sometimes, the carrier’s own insurance may be enough, but there are often many exemptions of liability so relying on this option might be risky.
Goods in transit insurance is not only for international, cargo shipping, and may also be subscribed by any company which needs to have goods shipped from a supplier, even is this supplier is just a few miles away. Typical coverage usually includes:
- theft whilst in transit,
- damage caused by perils during transit,
- loss whilst in transit,
- damage caused during transit,
- shipment delay.
Goods in temporary storage may or may not be covered
How to get the best price?
It’s important for any business representative contemplating subscribing to a goods in transit insurance to make sure a few things have been checked, before looking for the best price for this insurance policy.
What to check first
Naturally, one of the first things to check will be the extent of the coverage provided by the policy:
- typical “catch-all” standard policies do not include damages caused by wars or strikes, so you should carefully evaluate those risks in the country of production - and in between, because piracy is considered as an act of war;
- frozen goods or hazardous goods which might be altered during shipment will either not be covered or carry expensive premiums;
- so-called “target goods” like computer equipment may only be covered for up to 50% of their value in case a claim is made.
The amount of the coverage should carefully be evaluated:
- buyers will be typically insured for the value of the goods at invoice cost, plus freight charge, plus an advance or around 10% to 20% for shipping expenses and unexpected expenses;
- sellers should make sure their profit is included in the covered invoice costs, and evaluate an advance valuation including such variables as taxes and duties.
Insurance premium prices
Goods in transit insurance premium prices are usually calculated as a proportion of the value of the insured shipped merchandise. There are a few business insurance providers on the market offering this kind of product and interested business representatives will have to ask each of them for a quote, so it’s better to use the services of B2B websites like the one you’re browsing now.
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