There are many risks involved with freight shipping, and it’s vital to have your goods insured. Container insurance can help you avoid spending unnecessarily and protect your investment. Here’s how 👇
“Containerization” has been growing steadily in the last few decades. Millions of containers are being shipped via sea, land, and railway. But here’s the catch! Freight shipping also comes with some risks that result in container damage. Which is why it’s good to be prepared and invest in container insurance.
Container damage can add unnecessary financial strain on you as a shipper, however, not many opt for container insurance due to lack of information. Let’s get into the basics of container insurance and see why it’s important to protect your investment.
What is container insurance?
Container insurance is a type of protection policy that offers reimbursement for the loss or damage of your container. These losses can occur from unpredictable weather circumstances, overturning, collision and possible damage to the ship.
The aftermath of container damage isn’t always kind to your wallet, so let’s dive into why this type of insurance is important and how it can benefit you.
Why do you need container insurance?
Many importers, shippers, and freight forwarders are unaware of the importance of container insurance. Most choose to skip out on it to save money, only for it to cost more at the end of an unforeseen incident.
|By opting for container insurance, you can
Ensuring the safety of your goods in transit is the smartest way forward in freight shipping. It’s highly beneficial to protect your goods from damage or loss and even save some extra cash. Knowing which type of insurance is for you can also be beneficial, so let’s understand the 5 different types:
5 types of container insurance
There are many brokers in the market offering insurance to container owners, lessors, and operators. Sometimes, insurance brokers offer containers together with cargo insurance.
Container insurance varies from broker to broker. However, in general, most insurances cover the following aspects:
- Physical loss and total loss
- Recovery and maintenance costs – Full Equipment Cover (FEC)
- Damage repair and lost units
- Third-party liability (example: What is a chassis? Chassis, in freight & logistics, refers to a skeleton framework with wheels on it used to move containers. It is also called intermodal chassis or container chassis. Similar to ... More)
- Coverage on residual value on equipment
Container Insurance might not cover certain conditions (and this can vary):
- Mysterious disappearances
- Mechanical/electrical breakdown
- Errors in design/manufacture
- Depreciation, inconsistent maintenance routine.
The containers are inspected when they are returned to the owner. If they find damages on the container, the owner makes a cost estimate for fixing the damages. This estimate is then sent to the container user. The user arranges another inspection to recheck the charges. After that, the user and the owner negotiate the cost estimate. The charges are then settled using the insurance brokers. When the insurance is not a part of the deal, the user faces the inconvenience of paying from their own pocket.
When we talk about insurance in this industry, it’s difficult to get around the P&I clubs – here’s a lowdown on what that is and what they do.
Now that you know the different types of container insurance and what comes with it, it’s good to know where your responsibilities lie when going forward.
Who is responsible for container damage?
If you’ve been in the industry for some time, you’ll know that it’s important to be aware of the responsibilities following container insurance. Starting with who is responsible for container damage?
The freight carrier is accountable for delivering the shipment undamaged and in excellent shape and condition. The shipper must make sure that the products were undamaged when they were received and that they were still useful when the carrier picked them up.
The number and extent of the damage must be counted and documented. There are exceptions to the rule that the carrier is liable for damage claims resulting from events such as damage from severe weather conditions, war, terrorism, or where it can be demonstrated that the firm transporting the goods was careless in the packing or labeling of the products.
Container insurance can also be confused with cargo insurance. And most often, these two terms are used interchangeably. To avoid the confusion, let’s distinguish the two for you.
Container insurance vs. cargo insurance
Container insurance and cargo insurance are not rivals, in fact, getting the two together can be most rewarding. Some insurance brokers may offer both as a package deal, however, it can be separated if you’re thinking of opting for just one.
|Protects the freight forwarder or carrier
|Protects the sender or manufacturer
Opt for container insurance on Container xChange and lower the risk of liability when investing in your container.
Get container insurance on Container xChange
Container xChange with the help of ATS Insurance offers container insurance to customers. The container suppliers can include insurance as part of container usage on every transaction they make or on a case-by-case basis. Regardless, the user of the container always pays for the insurance.
At Container xChange, customers benefit from 2 types of container insurance:
|Total Loss Insurance
|$2.50 USD up to 4.10 USD per container
|Container Damage Insurance
|$12 USD up to 140 USD per container
These prices are dependent on container type and are subject to a 60-day period.
Our container insurance provides thorough coverage for (actual) total loss, constructive total loss, general average, and strange disappearance. Our goal is to lower risk and liability while performing one-ways on Container xChange. You can add container insurance to any deal.
Basic and Premium insurance
The Basic Insurance covers the equipment from a total loss such as lost at sea, mysterious disappearance, or extensive damage that can’t be fixed. The insurance is valid for one-way moves up to 60 days from the day of pick-up. The insurance renews automatically after the 60 days unless you report that the box has been returned empty.
The Premium Insurance covers all kinds of physical damage a container can go through. That includes a total loss. That’s why the premium insurance has a slightly higher price point. Physical damage can happen because the vessel sways, the crane lifters mishandle the container, heat damages the container, a train that derails, and so on. The premium insurance covers any costs that go above the DPP. The insurance is valid for one-way moves up to 60 days from the day of pick-up. The insurance renews on a day-to-day basis unless you report that the containers have been returned empty.
Apart from the insurance, there is also the Damage Protection Plan (DPP). The DPP helps to compensate for the regular maintenance and repair after the container is used. The container supplier pays for the DPP. The insurance covers any costs that are higher than the DPP. DPP is useful when you don’t want to make damage assessments every time you lease out a container. It takes care of all the repair costs if it falls under the negotiated DPP amount. The Basic Insurance for a 20DC costs $2.5. The Premium Insurance costs $12. The price varies according to the size and type of container.
Click on the banner below and learn more about the prices on container insurance at Container xChange.
What is container insurance?
Container insurance is a protection policy that reimburses loss from container damage
What does an ocean cargo policy cover?
An ocean cargo policy covers goods while in transit, including during custom delay or in situations that cannot be controlled.
What is the cost of container insurance?
The cost of container insurance varies from broker to broker. The price is dependent on the type of insurance you take, as well as the broker you choose.