3 Cargo Coverages for Manufacturers
As a manufacturer, making sure your product gets to buyers is just as important as the product itself. If you’re shipping product yourself, you likely have “cargo” insurance coverage protecting the items while they’re in transit. If you’re using a third party, you’re probably relying on their “cargo” coverage to protect your products. But, what if this isn’t enough?
While the vast majority of cargo insurance claims are simple affairs, there are many reasons something could not be covered. For example, most policies require the cargo carrier to be liable for the damage, or may have exclusions for acts of god and theft by an employee, among others. Further, if the shipping contract isn’t written correctly, it could make you 100 percent liable for damage to the cargo. There are a variety of solutions available to the manufacturer who wishes to make sure their product is safe.
Cargo/Contingent Cargo Policies
A widely used option – you can secure your own “cargo” or “contingent cargo” policy. These policies pay for loss to your cargo while in transit. Or, in the case of contingent cargo, it pays when a third party’s policy is responsible but denies the claim.
Shipper’s Interest Policies
Manufacturers also have available “shipper’s interest” policy. This is commonly purchased when a manufacturer completely outsources shipping. It’s considered an “all-risk” type of policy with very little exclusion and, unlike standard cargo policies, it pays out regardless of whose “fault” it was.
Stock Throughput Policies
Another solution is a “stock throughput” policy. Manufacturers’ products are usually covered on the same “property” policy as their building and equipment, but those policies are location-specific and have severe limitations for products in-transit or off-site. Stock throughput, on the other hand, isn’t location-specific. This means coverage applies to the product while it’s being made, shipped or stored off-site; these policies can even offer marine shipping and international coverage.
While all manufacturers have cargo exposure, the best solution is one that is tailor-made to your shipping strategy. Make sure to coordinate with your broker and review all shipping contracts so you can be sure your product makes it to where it’s supposed to be.
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