Marine cargo insurance for goods your business owns in transit

Businesses moving goods they own: manufacturers and wholesalers sending stock, importers and exporters, retailers transferring inventory between stores, trades moving materials to site, and businesses relocating plant or equipment between their own locations.

If you are paid to transport goods that belong to your customers, that is a different policy: marine carriers insurance. If the goods are yours, this is the cover designed for the load itself.

Marine cargo insurance follows the goods through the journey rather than attaching to one truck, ship or aircraft. The policies we usually place are written on an accidental damage basis: broad cover for accidental loss or damage in transit, subject to the exclusions and limits in the wording and schedule.

International shipments may use the Institute Cargo Clauses, with Clauses (A) providing the broadest commonly used basis, subject to its exclusions. Domestic transit is usually expressed in the insurer's own wording.

Cover can include loading, unloading and incidental storage during the journey. Deliberate warehousing or storage for distribution can end the transit, so the start and finish points matter.

One detail worth checking early: on one wording we place, goods carried in your own vehicle rather than by a transport company have to be declared on the schedule before they are covered.

Because then you lose control of the claim. If the carrier's insurance is the only cover, you depend on the transport operator's claim and there may still be an argument about liability. Your own marine cargo policy lets you claim directly for covered loss to your goods.

You deal with your insurer and broker, get the loss assessed, and leave any recovery from the carrier to be dealt with afterwards where appropriate.

A computer retailer had a pallet of monitors in its warehouse ready to be loaded onto a truck for delivery to the purchaser. The warehouse hand lifted the pallet with a forklift, caught the side of the warehouse doorway and the pallet tipped over. The monitors were destroyed.

The loss was about $58,000. We claimed under the client's marine cargo policy because loading and unloading formed part of the insured transit. The client's excess on that claim was $250, and the claim went through without becoming a dispute about who else was at fault.

Do not automatically insure the retail selling price. Marine cargo cover generally responds to the value of the goods, not the profit you hoped to make from selling them.

Goods you bought or sold commonly settle on invoice value plus freight. Stock moved between your own locations is usually based on what it cost you. Plant and equipment may be based on repair or replacement, depending on the wording. Overseas shipments use the value basis agreed on the schedule.

That is why we ask for the most valuable load, not the average one. A pallet might retail for $80,000 but have an invoice value of $52,000. The policy needs to be set around the value it will actually pay; lost trading profit is not automatically part of the cargo claim.

Temperature-controlled stock is one area where wordings differ. One can include unexpected deterioration on Australian journeys, including some refrigeration breakdown and temperature-setting errors. Both of the wordings we place require frozen or chilled food to be declared and agreed first, regardless of which one covers you. Where you carry your own chilled goods, that cover depends on you keeping the refrigeration machinery properly maintained.

The truck policy does not fix this. It may insure the vehicle and refrigeration unit, but not the chilled stock inside. Tell us about temperature-controlled goods before they move.

Poor packing. Loss caused by inadequate packing can be excluded where you or your employees packed the goods, or where it was done with your knowledge.

Undeclared household or domestic goods. Furniture, appliances and personal effects may need to be declared and accepted before transit.

Value above the insured amount. If the load is worth more than the amount on the policy, the shortfall on a total loss is yours to cover, and on both wordings we place, a partial-loss claim can also be reduced in proportion to how far you are underinsured, not just paid out in full up to the sum insured.

Routes outside the agreed territory. A new export route or destination should be checked before the goods leave.

We start with the goods and the journey, not a quote screen. What are you moving? What is the most valuable load? Is it in your own vehicle or with a carrier? Does it go overseas? Who packs it? Is any of it chilled, fragile or attractive to thieves?

Then we read the basis of cover, any-one-conveyance limit, geographical limits, transit start and finish points, valuation basis and special conditions. The job is to tell you what the policy will do with the load on the road tomorrow.

1. Insuring the average load instead of the worst one. The limit should be able to hold the most valuable consignment that could be on one vehicle or in one shipment.
2. Letting the schedule go stale. New products, higher stock values, new countries and a change from air to sea freight can all change the risk.
3. Assuming the carrier's insurance is your insurance. It is not.
4. Assuming a business pack transit limit is enough. It can be well below the value of one loaded vehicle.