LOGISTICS INSURANCE

The Insurance taken for logistic business is known as Cargo Insurance / Marine Cargo Insurance which covers risks involved in transporting good by all modes of transport and at every stage of the movement.

The primary benefit of purchasing cargo insurance to protect the value of goods and coverage of goods in transit during land, sea or air transportation.

It provides the insurance cover in respect of loss or damage to cargo during transit by rail, road, sea or air. It covers the export and import shipment by ocean, trans-shipments, consignments sent by rail, road and air, articles sent by post, etc.

The insured must have an insurance interest in the goods at the time of loss. The insurable interest or obligation to take out insurance is usually determined by a term of delivery.

The marine cargo insurance usually covers:

Loss of damage to cargo during transit

Expected profit from sale of goods at place of destination.

Financial losses attributed to delay in start-up caused by loss or non-delivery of insure cargo.

 

IMPORTANCE OF CARGO INSURANCE

The primary benefit of purchasing cargo insurance is to protect the value of goods.

It normally provides indemnity against loss of or damage to merchandise caused by fire or explosion, collision, sinking, capsizing, washing overboard and general average sacrifice.

Cargo may be exposed to a variety of risks while in transit with damages or losses occurring during storage.

In the event of emergency, a cargo ship may voluntarily sacrifice part of its cargo.

Cargo policies will indemnity against loss or damage to goods being shipped as a result of an even insured against in that policy.

 

HAZARDS IN LOGISTICS

Hazards means loss or risk; a threat of damage, injury, abilities, loss or any other occurrence that is caused by external or internal vulnerabilities.

All businesses have some level of risk and the task of business to minimize the risk and maximize profit. In most cases risk is addressed through insurance, initially physically insurance such as fire, theft, public liability, etc.

Hazards of shipping goods by sea

-Weather and geographical hazards

It includes natural calamities like typhoons, cyclones, which pose a serious threat to the sea freight and can cause serious damage to your cargo vessel.

A marine transit insurance policy can give coverage like earthquake, lightening, washing overboard, entry of sea or river water into the vessel, etc.

-Man made hazards

Risk happens due to the fault of people on the ship. Many a times, losses or damages occur while loading into or unloading goods from craft or vessel.

Packaging hazards

Goods get damaged despite the proper packing, damaged due to improper packaging, owner can refuse to take the delivery of goods and file a case against you. In this case, marine insurance company can agree to cover your losses or damages which may arise due to improper packaging.

The marine insurance policy covers the loss or damage to property caused due to:

Natural disasters like cyclone, lightening, earthquates, etc.

Man-made disasters like theft, violence and piracy of ships

Collision, overturing of land conveyance, sinking of ships

Expenses such as survey fees, forwarding cost, etc.

 

Hazards of Logistics by roadways

Passenger lawsuits: Common automobile accident case involves two vehicles. With the driver of one calming the driver of the other was responsible. Sometimes only one vehicle is involved. In this case, the passenger in the vehicle may claim injury as a result of his own driver’s negligence eve if the driver is a close friend.

Major hazards due to problems by road transportation

Most of the Indian roads are not suitable for use of vehicular traffic.

Mixing of traffic

Multiple check posts, toll, etc

Low attention on road safety and traffic laws

Transport infrastructure risk

Risk of theft

Risk of overloading

Risk of drunken drivers

Weather conditions

Political and government related risk

Technological risk

Driver shortage risk

 

Protection – Types of Cargo Insurance Policies

Cargo insurance

Marine cargo insurance also known as freight insurance covers the risks of loss or damage to goods and merchandise while in transit by sea, rail or air. Examples:

Manufacturing: bringing raw materials and distributing finished products

Agriculture: ranging from grains and fruits to livestock transport

Wholesalers: moving goods from producers to retailers

Retailers: moving stock from warehouses and stock transfers

Mining: Importing and Exporting raw materials and shipments

 

Hull insurance:

Insurance of vessel and its equipment are included under hull insurance. It is also known as boat insurance that covers damage to a boat, its machinery and its equipment. This type of marine insurance is mainly taken by the owner of the ship in order to avoid any loss to the ship in case of any mishaps occurring

Liability insurance:

This protects an individual or business from the risk that they may be used and held legally liable for something such as malpractice, injury, etc. Business owners may purchase liability insurance that covers them if an employee is injured during business operations. Some of the liability insurance are:

Employer’s liability and workers compensation – type of mandatory coverage for employers which protect the business against liabilities arising from injuries of the death of an employee.

Protect liability insurance protects against lawsuits arising from injury or death caused by their products.

Indemnity insurance provides coverage to protect a business against negligence like resulting from mistakes or failure to perform.

 

Freight insurance:

Cargo insurance provides protection against all risks of physical loss or damage to freight form any external causes during shipping, whereby land, sea or air. It also covers options to insure from ‘warehouse to warehouse’. The freight insurance policy will cover the goods from the full value declared. It can be purchased directly from a shipper or from a third party insurer also called as cargo insurance.

COMMON CAUSES OF ACCIDENTS IN LOGISTICS

Some common causes of accidents in warehouses:

Fork lifts

Hazard communication

Mechanical power transmission

Electrical works

Respirator protection

Lockout / tagout

Portable fire extinguisher

 

Some common causes of travelling accidents

Drive fatigue

Debris on highway

Hitting a stopped vehicle from behind

Driving off the side of the road

Speeding

Poor road conditions

Loss of control

Mechanical failure

Shifting cargo

Lane driving