Transporting goods, whether nationally or internationally, involves unavoidable risks. Having merchandise insurance ensures protection against unforeseen events and provides peace of mind to businesses and carriers, knowing their goods are safeguarded from potential losses or damages.
What Is Merchandise Insurance?
Merchandise insurance, also known as “freight insurance,” is an agreement designed to protect the goods being transported against losses or damages caused by risks outlined in the policy’s specific terms.
Insurance documentation is essential for customs clearance. Generally, only an insurance invoice is required to proceed with customs clearance for the goods.
Is Merchandise Insurance the Same as Carrier Liability Insurance?
Some people confuse merhandise insurance with carrier liability insurance. This confusion arises because both cover goods during transport. However, their coverage differs. With merchandise insurance, the risks covered and the contract’s fixed compensation depend on the exporter, while carrier liability insurance follows different rules.
Certain circumstances make the carrier liable for damage to the goods, while other situations are considered accidents requiring merchandise insurance. The scope of the carrier’s liability is established by specific international conventions.
Who Is Responsible for Goods in Maritime Transport?
Focusing on Partida Logistics’ primary activity, we refer to the international convention governing shipping companies’ responsibilities in the transport of goods. This is the 1968 International Convention for Bills of Lading, better known as the Hague Rules or the Brussels Convention.
According to this convention, shipping companies are not liable for loss or damage to goods if they prove the loss or damage was caused by:
- Inherent defects in the goods or weight loss during transport
- Navigational errors by the crew
- Fire
- Unseaworthy vessels
- Force majeure
- Strikes or lockouts
- Shipper negligence
- Hidden defects onboard that could not be detected during a rigorous inspection
- Attempts to save lives or property at sea
Currently, the European Union does not have harmonized compensation rules, which are often limited to a certain amount per kilogram of lost or damaged goods. This system creates issues similar to those faced in railway accidents, leaving exporters at risk of losing much of their goods’ value.
Why Have Merchandise Insurance for Your Shipment?
Transporting goods exposes them to risks that can compromise their integrity, from accidents to theft or damage. Merchandise insurance acts as an essential safety net to protect the financial interests of exporters, importers, and carriers.
Among the main reasons to purchase merchandise insurance are:
- Mitigation of Financial Risks: In case of incidents such as damage during loading and unloading or theft, insurance guarantees financial compensation to minimize losses.
- Comprehensive and Customized Coverage: Policies can be tailored to the client’s needs, covering everything from accidents to environmental risks like moisture or oxidation.
- Compliance with Regulations: In many cases, having insurance is a requirement for operations in certain countries or to meet customs regulations.
Merchandise insurance not only protects goods but also strengthens the commercial relationship between exporters and importers by ensuring the security of operations.
Common Risks During the Transport of Goods
Goods in transit are exposed to various risks. Here are some of the most common, often covered by merchandise insurance:
- Fire or Explosion: These risks are higher when transporting flammable substances or using vehicles that require large quantities of fossil fuels.
- Transport Accidents: Accidents can occur on the road, and while carrier liability insurance covers some cases, others fall under merchandise insurance.
- Theft or Loss: Goods are vulnerable to theft or loss, especially in warehouses, ports, and loading/unloading areas.
- Damage During Loading and Unloading: These delicate processes involve the handling of goods and containers, increasing the risk of impacts or collisions.
- Moisture and Oxidation: Goods can suffer from moisture-related damage due to rain or spills, leading to issues such as mold, oxidation, or particle disintegration.
The Importance of Merchandise Insurance in International Transport
International trade increases goods’ exposure to additional risks, such as long transit distances, handling at multiple points, and adverse weather conditions. Having the right insurance is essential to face these challenges.
Moreover, differences in regulations between countries and liability limitations established by international agreements, such as the Hague Rules, can leave exporters unprotected without merchandise insurance. For example, in cases of force majeure or hidden defects in the vessel, the shipping company may be exempt from liability.
Partnering with Partida Logistics
In this context, Partida Logistics stands out as a strategic ally. With extensive experience in customs management and international transport, they provide personalized advice to ensure each shipment has the appropriate coverage. Trust Partida Logistics to protect your goods and guarantee the success of your commercial operations.
