Exporting Your Goods
Cargo Insurance
Cargo insurance is critical in exporting as international carriers assume only limited liability for goods when shipping by air or sea. Terms of sale often make you, the seller, responsible for the goods up to the point of delivery to the foreign buyer. The following five questions and answers can help you make decisions about cargo insurance:
What does marine transportation insurance cover?
What types of cargo insurance coverage are available?
How much are goods in transit typically insured for?
Where can we get cargo insurance?
When does our legal liability end?
What does marine transportation insurance cover?
Marine insurance covers not only ocean cargo but air cargo and connecting land transportation. Generally, the policy will be either (a) special cargo indicating that only the one shipment is covered, or (b) open cargo which will cover all shipments made by you as an exporter. The latter is generally used by exporters who frequently ship in large volume.
What types of cargo insurance coverage are available?
- FPA (Free of Particular Average), which provides minimal coverage. Total losses are covered, as well as partial losses at sea if the vessel sinks, burns, or is stranded.
- WA (With Average), which offers more complete protection from partial losses in transit.
- All Risk, which offers the most comprehensive coverage, protecting against all physical loss or damage from external causes.
How much are goods in transit typically insured for?
Goods shipped by sea are typically insured for 110% of their value to compensate for the extra costs involved in replacing lost goods.
Where can we get cargo insurance?
- Your freight forwarder
- A Canadian-owned insurance company
- A foreign-owned insurance company
When does our legal liability end?
Once the documents transferring title are delivered to the foreign buyer, you are no longer liable for the goods