Losses during transport occur daily. Containers shift and fall overboard, vessels collide and capsize, cranes puncture containers, weather damages goods and maritime piracy continues throughout the seas. All of these situations compromise the safety of goods travelling both domestically and internationally. Marine Cargo Insurance covers the loss, damage or theft of goods while in transit.
The direct loss is only the tip of the iceberg as the indirect losses are even more drastic to your company’s bottom line. Managing the direct loss will help offset the effects of the indirect losses.
Determining the Probability of Loss & Economic Consequences
To determine the probability of loss, take the total number of shipments in one year and divide by the number of shipments that were compromised in that 12 month period.
Example: If 13 shipments were compromised out of 1,000 shipments. The probability of loss is 1.3%.
To determine the economic consequence associated with a loss, take the probability of loss multiplied by the average value of the shipments.
Example: The average value of the shipments is $250,000. So the economic consequence is $3,250 ($250,000 x 1.3%) for each shipment that year.
The need for marine insurance is apparent. Many cargo insurance policy holders are not insuring their goods in the most cost effective way. The market is soft, so now is the time to shop rates and compare marine insurance providers. If you already have an annual policy your rates should be dropping! If you insure shipment by shipment your charges should be dropping! Whether you purchase an annual Marine Cargo Insurance policy, self-insure, insure shipment by shipment or purchase CIF, request a quote for an annual policy will be very beneficial to your company during these hard economic times.
Source by Jena Leary
