Current Location: Home » Knowledge » Logistics Insurance » Text

Cargo Insurance Basics (1)

Zoom  Zoome in   Views:14206
Core Tip:Cargo Insurance Basics (1)

The open cargo policy is framed to serve the purpose of the regular shippers. The approved merchandises are automatically offered protection under the sales terms. This helps nullify the requisition of negotiating the terms and conditions, limits and rates for insuring each and every shipment. Under this type of coverage policy the merchandises can be covered “All Risk”, With Average (WA) or Free of Particular (FPA).

All Risk coverage 
This is the most extensive form of coverage that insures approved cargo against the loss or damage caused by any external forces. This policy includes new, packaged goods that are not vulnerable to pilferage or breakage. The “All-Risk” policy does not offer coverage for the losses that might be incurred in the course of international freight transition.

The exclusions in“All-Risk” coverage are:

  • Disposition of Cargo
  • Inappropriate packaging of the goods
  • Refutation of the goods by the customers
  • Loss due the nature of the cargo itself
  • Failure to collect accounts or make payments
  • The change or transfer of employees or their dishonesty
  • Delay of loss of the market
  • Losses that exceeds the coverage limits
  • Used goods
  • Barge shipments
  • Losses incurred at the port more that 15 days after the goods had been discharged off.
  • Losses incurred inlands more that 30 days after the freight had been discharged.
  • Losses incurred to the goods that are subjected to on-deck billing.
  • Losses incurred due to air pressure of fluctuating temperature in case of air shipments
    • Failure to inform the air carrier timely about the initial losses
    • Non- delivery – 120- days
    • Hidden damage- 14 days
    • Obvious damage- 7 days

Free Of Particular Average of FPA
This is mainly a limited coverage that offers coverage to waste materials, used goods and the goods that are subjected to on-deck bill of landing. This policy offers coverage against losses caused by FPA hazards which includes stranding, collision, sinking or burning of the vessel or any other catastrophe on shore like fire, earthquake, derailment or the collapse of the dock.

FPA conditions loss coverage

Harsh weather, lightning, barratry of the mariners or masters, assailing thieves Covered (only for Total Loss)
Stranding, burning, sinking, collision, fire while on deck Covered
Stranding, burning, collision while under deck Covered
Explosion or fire Covered
Stranding, sinking or burning of the ship or the craft Covered
Collision or crash of a land or air conveyance Covered
Collision or a marine conveyance with any external object like ice-berg other than water Covered

With Average or WA coverage
This policy acts as an extension of the FPA to cover the damages incurred by harsh weather. Eventually in many cases the FPA and WA may be extended to cover non-delivery, theft and pilferage.


Sinking Covered Covered Covered
Stranding Covered Covered Covered
Collision Covered Covered Covered
Burning Covered Covered Covered
Bursting of boilers Covered Covered Covered
Vessel Management Errors Covered Covered Covered
Defects machinery or hull Covered Covered Covered
Jettison Covered Covered Covered
Perils or harsh weather Covered * Covered Covered
Seawater Covered * Covered Covered
Fresh water Uncovered Uncovered Covered
Mud, grease or hook damage Uncovered Uncovered Covered
Fault storage by the carrier Uncovered Uncovered Covered
Non-delivery of the entire package Uncovered Uncovered Covered
If the entire consignment is stolen Uncovered Uncovered Covered
Leakage Uncovered Uncovered Covered
Pilferage Uncovered Uncovered Covered
Breakage Uncovered Uncovered Covered

* only total losses and not partial losses -Certain exclusion and alterations may take place in coverage polices depending upon the nature of the consignment.


If you believe that this information is a violation of your legitimate rights and interests, please send the relevant qualification certificate and your rights to, Worldinout staff will reply as soon as possible! The purpose of this network is to convey more information, does not mean that the network is in favor of its views and its authenticity. Such as reproduced this site information, please specify the source.

[ KnowledgeSearch ]  [ Add to Favorites ]  [ Tell a friend ]  [ Print ]  [ Send report ]  [ Close the window ]


Recommended Graphic
Recommend Knowledge
Click Ranking
HomeSite | About us | Contact Us | Agreement | Copyright | Sitemap | Spread | Guestbook | RSS Feed