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What is international cargo insurance and how to buy it?

A company that operates with international purchases and sales must always pay attention to the characteristics of the product, storage conditions, place of origin and destination of the product. Such aspects are extremely important when closing a deal, because in addition to these issues, the feasibility and risk of the operation must be evaluated.

In order to help during the transport of the goods and avoid additional costs related to possible accidents that may occur along the way, it is advisable to take out international cargo insurance, increasing the feasibility of the operation and reducing risks and extraordinary costs.

Knowing that there are several types of insurance policies that have specific coverage, it is important to take note of the particularities of each operation so that, if necessary, the insurance is properly applied and extraordinary losses are avoided. For this, we will deal with several relevant aspects in the analysis of the operation for the contracting of insurance appropriate to the scenario in question.

What is international cargo insurance?

International cargo insurance is insurance with the purpose of applying protection to goods from a predetermined origin and destination in the policy, and can be contracted by the importer or exporter. Its purpose is to prevent financial losses from any accident that may occur during the international journey.

Depending on the initial negotiation between the importer and exporter, there are incoterms that already have the goods insurance applied by the exporter, for example, CIF and CIP. When the insurance is applied in this way, the insurance is highlighted in the Commercial Invoice and paid according to the payment terms of the invoice. The other incoterms do not have insurance included, but this is not an impediment to hiring by other means.

What does insurance cover?

If one of the parties is interested in contracting the insurance, the details of the goods, storage conditions, transport, handling, the origin and destination of the goods must be carefully observed, because, in the event of any accident or damage outside the foreseen , it is possible that the financial loss is not recoverable.

In the insurance policy, it will be informed what the insured has to cover and other clauses for non-indemnifiable damages. Therefore, we mention some of the most common basic coverages, each encompassing from specific coverage in common to more specific coverage highlighted according to the load and transport scenario, they are:

Restricted (C): Explosion, lightning or fire; Shipwreck or grounding of the vessel or vessel; Collision, overturning, overturning or derailment of a land vehicle; Collision or contact of the vessel or ship with any external object other than water; Forced landing of the aircraft, fall or collision, duly proven; Cargo thrown overboard; Cargo unloading in port of arrival; Total loss of any volume, provided that it is during the loading and unloading operations of the ship; and total loss arising from misfortune or snatch at sea.

Restricted (B): Damages and losses flagged in basic coverage; Restricted (C); Falling or collapsing of other objects on the means of transport or cargo, provided that it occurs during the land trip; Overflow of water courses, lakes, ponds, dams and floods, provided that it occurs during the land journey; Ingress of water (whether from sea, lake or river) into vehicle, vessel, van, container or storage locations; and volcanic eruption or earthquake.

Broad (A): It has coverage in order to protect the cargo from any and all damage caused by external factors, excluding only the causes provided for in the non-indemnifiable damage clauses of the policy.

Other types of coverage follow the coverage of B for the restricted ones and A for the broad ones, varying according to the specific scenario of the operation: restricted and broad basic coverage for shipments of goods/goods packaged in refrigerated environments; Restricted and broad for frozen goods/goods; Wide for live animals, with the one that occurs via air transport of live birds and the other transport, except for air shipments of live birds; and basic coverage for baggage and cargo insurance carried by carriers.

It is important to mention that it is possible to include additional services in the policy, such as protection: during the loading/unloading or lifting operation; for transporting furniture and fixtures changes; for road trips with part of the river route; for the transport of art objects; among others. 

Why take out international cargo insurance?

The contracting of international cargo insurance is not mandatory.

Insurance in general exists because unforeseen events, accidents and breakdowns can happen. Usually the cost of international cargo insurance is so low that it does not justify taking the risk of losing all the financial investment made in that operation. 

Insured merchandise helps to maintain operating terms, prices and costs. In the event of a claim, if there is coverage, there will be reimbursement of the financial loss according to the policy coverage by the insurer. 

On the other hand, if the loss of uninsured goods occurs, the financial loss generates the need to place a new order, directly impacting the company's cash flow and the delivery period of the product or production, which may make the continuity of the operation unfeasible and sequence of projects.

What are the types of carrier liability insurance?

Transport insurance in Brazilian territory, known as carrier civil liability insurance (RCT) is mandatory insurance. In any type of cargo transport in the national territory, it will be necessary to contract insurance according to the mode of transport, as the insurance aims to have coverage for accidental situations specific to the mode of transport. Types of liability insurance include:

RCTR C – Civil Liability Insurance for Road Cargo Carriers – Covering road freight transport.

RCTA C – Civil Liability Insurance for Air Cargo Carrier – Covering cargo transport by air.

RCTF C – Civil Liability Insurance for the Rail Cargo Carrier – With coverage for freight transport by rail.

RCA C – Civil Liability of the Cargo Owner – With coverage for third-party goods in domestic sea voyages.

RCF DC – Optional Civil Liability Insurance in case of Missing Cargo – Insurance is not mandatory, it aims to guarantee the carrier's responsibility in relation to cargo losses in case of simple theft or theft.

Do you want to know how to hire international insurance for your import? Contact us and we will help you through the process. 

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