Cargo Insurance Guidelines

The decision of whether or not to insure your freight is not always a clear-cut, simple choice. There are many factors to consider, such as the total value of the goods shipped, the shipping origin and destination, the mode of transportation.Once the determination is made, the next question is how to insure the shipment. To assist you in your evaluation, the options below outline the types of coverage available.

Legal Liability

If you choose not to pay to insure your shipment, the goods shipped are automatically covered under legal liability standard to the transportation industry. For domestic shipments the coverage is equal to $0.50 cents per $100.00 with a $100.00minimum provided the cost of the goods is greater than $100.00. In the case of partial loss/damage, only the lost or damaged portion of the freight is subject to the claim settlement amount of $0.50 cents per $100.00 For international shipments the legal liability set forth by the Warsaw convention is $20.00/kg or the actual value of goods if less than $20/kg. For international sea freight shipments the legal liability limit is $500 per customary shipping unit. (FCL: 1 container = 1 shipping unit, LCL: shipping units = piece count on the Ocean Bill of Lading)

Insurance of Goods Only

To ensure your shipment for the replacement of the goods shipped in case of total or partial loss or damage, request insurance for the replacement value of the goods=commercial invoice value.

Sneddens sells insurance for $0.30/$100.00 insured value with a $120.00 minimum for general cargo ( not personal effects).

Sample Insurance Calculation:Commercial Invoice Value = $10,000.00  Insurance Cost: $120.00 Commercial Invoice Value = $45,000.00  Insurance Cost: $135.00

Insurance of Goods + Shipping Charges

To ensure your shipment for the replacement of the goods shipped in case of total or partial loss or damage plus the cost of shipping the freight, request insurance for the CIF value of the shipment.

CIF + 10% Terms
(Commercial invoice value + insurance costs + freight= CIF value x 110% (10% for any unforeseen costs or charges))

This type of insurance covers your shipping costs too in the case of damage or loss where the repair or replacement must be done somewhere other than the consignee’s location. Recoverable freight charges may be prorated based on the portion of the shipment damaged in the case of partial loss/damage.

If there is damage and the repair occurs at the final destination of the goods (consignee’s facility), no freight charges are refundable.

For most destinations and commodities Sneddens sells insurance for $0.30/$100.00 insured value with a $120.00 minimum.

Sample insurance of goods + freight charges:

Commercial Invoice value = $40,000.00
Freight Cost: $500.00

Total CFR Value = $40,500.00 x 110% = $44550.00 = Amount to Insure
Insurance Cost = $133.65

If you have any further questions, please feel free to contact a Sneddens representative.

Under/Over Insurance

It is important to insure goods for the proper value. If a shipment is underinsured then the claim will only be paid to the percentage that the shipment was insured.

Goods Value: $10,000
Insurance Value: $5,000
Damaged repair cost: $4,000

The insurance was purchased at 50% of the goods value; therefore, 50% of the claim amount will be paid.

Claim Payment: $4,000 x 50% = $2,000 payment

If a shipment is over insured you are not able to get coverage beyond the repair/replacement costs. The result is an overpayment of premium.

What to do When There is Damage

Proper notation on shipping documents and notification to the appropriate parties is essential to ensure the ability to process a claim. Like all insurances, payment of the premium and freight charges is required in order for coverage to be confirmed and a claim to be filed and ultimately settled. As an example, if you don’t pay your auto insurance and get into an accident then you don’t have any coverage.

If damage is noted on the bill of lading at the time of delivery, then the claim must be submitted in full within 270 days of actual delivery. It is not necessary to refuse a shipment if proper damage is noted.Sneddens should also be notified immediately.

If damage is not notated on the bill of lading at time of delivery (concealed damage), then Sneddens must be notified within 24 hours of delivery.

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