Cargo insurance is crucial!
People often overlook the importance of cargo insurance, but the truth is that it has become crucial. According to the Hague/COGSA act, uninsured ship owners will not get more than 500 dollars per unit in the event of any damage, regardless of the value of their cargo. In other words, your cargo may be worth as much as 200,000 dollars, but you will only get as much as 500 dollars should it suffer any kind of damage.
Indeed, the limitations in the COSGA act come to reassure ship owners, but there are also quite a few inconsistencies therein. For instance, the ship owner is not held liable in the event that a ship at sea be seized by enemies during a war. Neither is he held liable in the event that any cargo must be discarded to prevent a ship from sinking. This is where cargo insurance comes to the rescue. So here are some of the cargo risks you should be aware of before you decide not to insure your cargo and thus risk facing significant losses.
Barratry is a legal term used to refer to situations where goods, including ships, are seized as a consequence of an illegal act being committed. Who the culprit is and why the police confiscate or seize that cargo bears is completely irrelevant as far as cargo coverage goes. Having those goods insured in advance can solve quite a few problems; however, not many people are aware of it.
It is possible that one of the reasons why some drivers choose not to insure their cars is because they rely on road traffic accidents being reasonably easy to avoid. Cargo ship owners, on the other hand, do not have this kind of reassurance. Accidents are much more difficult to avoid at sea, especially when loaded ships are involved, which makes cargo insurance even more of a necessity. In other words, two ships may still collide causing different levels of cargo damage despite spotting each other from miles away. There may be fog or the lanes may be congested. There are many unforeseeable risks, many unforeseeable scenarios that could involve cargo damage, so precautions should be taken.
Cargo insurance also protects ship owners in the event that they fall victims to pirates. They may also be sailing ships that are involved in various kinds of criminal activities or any kind of activity that could be of interest to governments of countries, in which case they may be attacked.