Based on market knowledge or cost reduction issues, many importers wonder about the need for international cargo insurance.
But if you stick to understanding the processes and saving investment in situations like these can cost even more. Is it worth taking this risk of cutting the cost of protecting the goods?
The guarantee of an international cargo insurance for goods in foreign trade is indeed an advantage, continue reading this article and you will understand more about what we are talking about!
How does International Cargo Insurance work?
The first decision you need to make is whether you see this possibility as ANEXPENSE, or as ANST. For the care that everything happens as expected is an investment and not a spent in vain.
From this line principle to reasoning we will show you the coverage models, their purposes and the benefits in each of the available options.
To obtain this insurance, a contract is made in agreement between the importer/exporter and an insurance broker. Before closing this agreement, the various insurance methods are presented to try to adjust to the maximum to each need, both of the goods to be used, and the modal chosen to transport.
According to SUSEP (Superintendence of Private Insurance), insurance involving transport is made to secure the insured a guarantee in unforeseen cases, with compensation in damages, and may be caused either in water, land or air travel, on national or international routes, depending on the regime determined in the agreement.
Although not mandatory, as we can observe this tool is considered fundamental for there to be a qualified and protected transport, favoring the importer / exporter the tranquility throughout the process and saving that unforeseen circumstances harm its negotiation and credibility.
A simple example is, assuming that it is done the transport of a sea freight and that it will take approximately 50 days, without having insurance throughout the trip the purchase will be unprotected crossing the high seas. And if during this period a big storm happens, part of its items are lost and the damage is irreversible.
It would be enough to cover the cargo insurance so that this was not an even bigger problem than it already would be. Do you understand how important it is now?
What existing types of insurance for international cargo transport?
There are some possibilities with their variations, it depends on how often the operations are done.
One of them is called Loose Insurance, used for situations of only one isolated trip. On the other hand there is also the Open Policy Insurance, which is used for companies that make more than one import or export process in the month, for these cases a twelve-month contract is made.
Usually the insurance is active only on the route of transport, but there are negotiation possibilities for it to be extended for loads that also remain in warehouses in certain periods.
How does insurance coverage work?
As for each commodity there is a more appropriate insurance proposal, they also subdivide it into categories. The following is their listing:
- Wide basic coverage A: covers any damage of external cause, including cargo thefts in it;
- Basic restricted coverage B: in this modality there is a guarantee in case of partial and total damage of goods in accidents involving the means of transport (airplane, truck, ship, among others). Theft coverage may be added if desired;
- Restricted coverage B: for this type of coverage is guaranteed on the total loss in accidents with the means of transport and against theft can also be added.
In addition to these formats there are still ways to add more security items to your policy thus making it more complete. This format is indicated for further customization according to the needs of each company code and which objects are transported.
Remembering that there is also a list of items that the insurance already advances that there is no coverage in situations of losses, damages or expenses generated from:
- Misconduct generated by the insured;
- Failures related to obtaining labor regardless of nature, be they strikes, lock-out, labor issues or riots;
- Wars, revolutions, rebellions or civil comotion;
- Acts of hostility of a belligerent power.
To organize and define the ideal modality and how it would be more appropriate to structure a specific insurance is advised that in addition to contact with the insurance broker, it is the help of specialists, in order to avoid investments without need.
Open Market has been operating in the foreign trade market for more than 23 years, and we are able to answer questions and direct the best decisions for your company.
About insurance costs
The care in the routes for the goods is one of the major concerns for every manager responsible for the logistics sector in a company involved in foreign trade, but along with this comes also the financial issues that involve this “care”.
Just as insurance is made in cars, which is placed on the tip of the pencil is understood that its value is relatively little compared to the value that can be in losses and losses, the insurance on import also falls into these questions.
It is through insurance that there will be all guarantees to cover unexpected damages and thus saving the amount that was initially invested in the merchandise itself.
There is no value listed for insurance, because as we can see in the excerpt we inform about the customization of policies, for each category and its additional a value will be stipulated. As well as the value has its variation evaluated along with aspects such as the transport vehicle, the destination for delivery, its displacement, insurance activation period, which product will be made the transport, among other details.
However, to have an initial idea, one must know about the Ad Valorem fee, which is an amount charged within the freight table, this becomes the basis for calculating the insurance cost for loads.
Among the calculations is also included the multiplication of the amount of the charge issued in the tax document and can also be added the IOF (Tax on Financial Operations). Therefore, to facilitate is indicated a company that assists in the analysis of proposals made by insurance brokers and ensuring the best choices.
Contact Open Market, we have experts ready to answer your questions. Count on us to ensure the utmost care and attention in importing and exporting products.