No matter how simple your logistics-setup is, there will always be the possibility of problems along your supply-chain.

So in order to manage the financial impact of these problems, businesses rely on insurances.

The most common insurance is cargo insurance. This type of insurance provides protection against all risks of physical loss or damage to freight from any external cause during shipping, whether by land, sea or air.

Insuring your cargo can be useful for 5 reasons:

1. There might be a contractual requirement to insure your cargo. Especially when selling goods CIP/CIF.

2. You need coverage for limited carrier liability, depending on the value of your goods. By law, carriers are not responsible for many common causes of loss that occur in transit. Even if they are liable, their liability is limited. Depending on your contract, you will receive cents on the dollars.

3. You will have more control over the insurance-terms. You could rely on the buyer's or seller's insurance, but you need to be certain that the insurance has in fact been purchased and that the insuring terms, valuation, and limits provided are adequate. Also, if claims occur, you might be dealing with courts in foreign countries with different laws.

4. Following a general average, you might need to post a cash-payment in order to have your cargo released, even if there hasn't beed damage to your cargo or loss or your cargo. If you purchased insurance, your insurance company assumes responsibility and will expedite the release of your cargo.

5. As mentioned above, insuring your cargo will limit the financial impact of loss or damage to your cargo on your bottom-line.

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