Why buy insurance?

Many merchants do not know that in the event of theft, loss or damage to their cargo then the legal liability of the carrier is restricted by law. It is our experience that these customers then try to hold back the freight payment or to try to claim the full value of the loss from the forwarder.

The liability of carriers and transport intermediaries are different in almost every country: you need a solution that meets or exceeds local requirements.

Carriage by Air
Most air carriers liability is governed by the Warsaw Convention and compensation cannot be more than SDR 17 / kg (SDR = ‘Special Drawing Rights’ and is about USD 25/kg but for the exact amount check  a valid conversion rate using the currency code ‘XDR’). You can read further details of the Warsaw Convention by clicking here: Warsaw Convention  
Carriage by Land
The most important treaty about land cargo is the CMR convention: CMR Convention  This limits the carriers’ liability at SDR 8,33 / kg which kg (which is about USD 12.5/kg but for the exact amount use a valid conversion rate). If the country of your carrier is not a signatory of the CMR convention then your liability is subject to local law and local limits.
Carriage by Sea
The liability of shipping lines is a broad and complex subject and it is mainly governed by the conventions referred to in the back of the Bill of Lading or Charter Party. The main conventions which govern the shipping world are:

Hamburg Rules

Hague Visby Rules

Carriage of Goods By Sea Act (COGSA)

To quickly demonstrate the complexity of ship-owners liability we can briefly look at the COGSA: COGSA  This Act limits the liability of the ship owners to USD 500 per package. Based on these regulations ship-owners began to argue that containers were single “packages” and that they could thus limit their liability to $500 per container. This led to much litigation and the rest of the world, seeing this as an attempt by ship-owners to free themselves from responsibility, then amended the Hague Rules in 1968 with the Visby Amendments.

These eliminated the “per package” limitation and substituted it with a per kilogram limitation. In so doing, litigation concerning limitations on liability became virtually non-existent outside of the United States, however the US Congress failed to ratify the Visby Amendments to the Hague Rules.

In China for example there is no compulsory liability insurance by law which covers the cargo against damage or theft during transit.

No need to find who was at fault
If you are uninsured in case of damage, loss or theft to the cargo then you have to prove which transport intermediary or carrier was at fault and you also have to accept the limited liability of your contracting parties.

Marine Cargo Insurance is a property insurance and covers the theft or damage to your cargo, irrespective of the legal limits or liability of carriers, forwarders or other transport intermediaries.

MIE protects you from hidden or unexpected costs
Most of the merchants do not know that they have to contribute to the selvage costs in case of General Average. Even if their cargo is unharmed they cannot be released until the General Average deposit is settled, which is usually a certain percentage of the cargo value. Even the cheapest MIE cover pays the General Average deposit.

Should you be a transport intermediary your customers might not know about the above facts and expect you to inform them about these risks before their cargo is transported. We advise you to offer our marine cargo insurance to your customers, and let them decide how they protect themselves from loss.

Accidents do happen.

Accidents do happen.