Insurance in logistics plays a crucial role in providing a security guarantee that addresses the complexities and uncertainties associated with the global transportation of goods. This issue becomes more relevant given the exponential growth of trade, where companies from various industries engage in cross-border transactions, sometimes in high-risk contexts.
Why is it important to take out insurance in international trade?
Cargo insurance protects goods during transportation; it covers the risks of loss, damage, and theft. This insurance is an agreement between two parties: the policyholder and the insurance company. The policyholder pays a premium to the insurance company in exchange for the company's commitment to protect the value of the cargo during transportation.
Types of insurance in international trade:
When entering international trade, it is essential to consider the possible types of insurance and choose the one that is most convenient. These include:
Transportation Insurance:
Cargo transportation insurance is a financial protection service that assumes and compensates for losses and/or damages suffered by insured goods during their transportation. The means covered in the insurance are maritime, aerial, and land transport.
Cargo Insurance:
Cargo Transport Insurance provides immediate protection for goods in transit from the point of origin to the destination, both nationally and internationally. Adapting to the specific security needs of each company or customer, this insurance covers a wide range of risks, including total or partial theft, pillage, vandalism, and damages occurring during loading and unloading operations, as well as failures in the refrigeration system.
In addition to offering comprehensive coverage for land, air, and maritime transport modes, the insurance provides protection against various hazards that may arise during the transportation of goods, such as losses or material damages caused by events such as fires, lightning, explosions, plane crashes, autoignition, sinkings, groundings, overturns, collisions, derailments, and bridge breaks, as well as incidents related to loading and unloading maneuvers.
There are two types of Cargo Transport Insurance:
Specific Shipment: Covers a single shipment of goods from one point to another, only for the duration of the shipment. This product is recommended when shipments are few (less than 24 per year) or very special.
Declaration of Shipments: Recommended when shipments are constantly made (more than 24 shipments per year) to avoid the client taking out insurance individually. This product allows the declaration of all shipments at the end of the month. The offered validity is one year.
Credit Insurance:
Credit insurance covers the risks of non-payment by companies arising from the sale of products and services in domestic and foreign markets. It is a tool that puts companies in a stronger position to compete in the market by covering their commercial risks.
Commercial risks occur in the field of business activities and mainly correspond to failures by private entities, with their most characteristic expression in situations of bankruptcy or suspension of payment.
Liability Insurance:
Liability insurance's main function is to cover the damages that the insured causes to the property (material damages) or health (personal damages) of a third party. Liability insurance legally covers all damages caused to a third party in the course of the insured company's activities. Furthermore, it provides protection and support to legally address and cover the expenses generated by the claim of the affected third party.
Business Interruption Insurance:
Business interruption insurance helps protect against income loss after a covered hazard affects a business. Covered hazards usually include theft, fire, wind, falling objects, or lightning.
The nature of transporting goods across borders exposes companies to a range of risks, from material damages to significant financial losses. Therefore, insurance acts as a crucial buffer by providing coverage against unforeseen events, such as accidents during loading and unloading, thefts, weather-related damages, or any eventuality that could affect the integrity of the cargo.
Risk prevention is essential to maintain financial and operational stability in a global business environment. By having adequate insurance, companies can safeguard their investments and protect against potential losses that may arise during the complex process of international transportation.
SPARX logistics offers a robust layer of protection through policies that foster trust among participants in each operation, thus promoting the expansion and continuous development of international operations by minimizing uncertainty and providing a financial safety net.
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