Does my business need cargo insurance?
For many, insurances are very complicated and difficult to understand completely. They usually have many conditions that cancel coverage if things are not done correctly. Because of this, small businesses rarely take insurances as serious as they should and avoid having to deal with the complications that may come with having the right coverage. However, having the right insurance coverage could very well be the difference between remaining operational or closing the doors to your business and losing everything.
In the world of import and export, carrying cargo insurance should be part of your daily business and part of your operation. So the answer to the question of does my business need cargo insurance? Is a simple and absolute yes. No matter how big or small your business is, if you are importing or exporting, your shipments should always have insurance with the right coverage.
As part of our operations, IMEX insures all of its merchandise in transit up to the point of delivery to customers. For us it is a must and we cannot overlook it or discard it as unnecessary. All of our shipments have insurance while in transit up to the moment they are delivered to our customers. Therefore, having the right coverage is essential to our value and it is a commitment with our business partners.
Insurance coverage can be complicated and expensive. When considering what your needs are, you must always keep in mind the transit of your cargo. Do you ship via air, sea, or land? How is your cargo transported from the moment it leaves your vendor until it arrives to your door? For how much should you insure your cargo? How fast can you replace your cargo in case that it is lost or destroyed? Should you have your own insurance or should you insure thru your freight forwarder? Does the insurance purchased covers your cargo while is in a warehouse? Does it cover theft, accidents, and acts of nature? All of these are important questions to consider when you are insuring your cargo and depending on your type of business, the answer could be as different and complex as the world of import and export.
You risk losing it all!
In Finance there is a motto that says that the greater the risk the higher the reward; but is it true? Sure, the riskier an investment is, the greater the return on investment, but it is also true that the loss you could have is greater. The latter part applies perfectly to the import export business when it comes to having or not having cargo insurance. Your risk of losing it all is directly correlated to how much risk you want to take on your insurance. If you don’t insure your cargo, you risk losing it all; if you don’t have the right coverage, you can recover part of it or none at all, and if you have the right coverage your risk is very small.
Every business owner is in to maximize profits. The formula to achieve this is quite simple and it could be a combination of different factors. In every business, there are operational costs that cannot be avoided and for those whose business model includes the transportation of goods, cargo insurance is a must. This is not something that can be negotiated nor should it be one that covers the minimum. The cost of having the right coverage can be expensive when you look at it from the point of view of a pure expense; but not having it could be worse because you could end up paying for merchandise that you will never receive.
You should always have an insurance that meets the needs of your business. Deciding what the right coverage is may be something that you need help figuring out and if this is the case, you should reach out to a professional that has the right knowledge and understands your business. Your next option is to obtain the insurance thru your freight forwarder. Here you will need to decide which one is more cost effective for you and it will depend in many factors including how much cargo you are transporting.
In conclusion, the best decision you can make is to insure your cargo, because you could end up losing a lot more than its value.