CARGO insurance is one of the key elements in protecting goods during road transport. Both the owners of the goods and carriers should be aware of their rights and obligations regarding CARGO and OCPD insurance to properly protect themselves against risks associated with transport. Below, we present how these insurances work and how to differentiate them.

What is CARGO insurance?

CARGO insurance is a form of financial protection that secures cargo during transport. It is a policy that protects goods against a range of risks, such as damage, destruction, theft, or loss that may occur during road, sea, air, or rail transport. CARGO insurance aims to reduce the financial risk for cargo owners in the event of random occurrences that may arise during transport.

In the event of damage, the cargo owner receives compensation that covers part or all of the costs associated with the loss or damage of the goods.

Why is CARGO insurance crucial?

Transporting goods involves many unpredictable risks that can lead to damage, destruction, and, in extreme cases, loss of goods. Without appropriate insurance, cargo owners could suffer significant financial losses. CARGO insurance allows goods owners to quickly recover part or all of the value of damaged goods, thus protecting their business interests.

The risk of damage to goods can occur at various stages of transport – from loading, through road, sea, rail, or air transport, to unloading. Each stage carries potential threats, and CARGO insurance provides protection against the consequences of these risks.

Types of CARGO insurances

CARGO insurance can take various forms, depending on the needs of the cargo owner and the specifics of the transport. Here are the most popular types of CARGO insurance:

1. All Risks Insurance
   This is the most comprehensive form of insurance, covering almost all risks associated with transporting goods, with a few exceptions. This insurance provides full protection against damage, destruction, or loss of goods, regardless of the cause.

2. Named Perils Insurance
   This is a cheaper form of insurance that covers only those risks that are explicitly listed in the policy. Examples of risks may include road accidents, theft, weather conditions (e.g., rain, storms), or damage caused by shocks. It is a more limited option, but may be appropriate for cheaper or less sensitive cargo.

3. CARGO Insurance for a single transport
   This insurance is taken out for a single transport. It is a short-term policy that covers one transport of goods from point A to point B. It is an ideal solution for one-off transport or rarely repeated shipments. The single transport policy is convenient because it is tailored to a specific cargo and transport route.

4. CARGO Rolling Insurance (annual policy)
   CARGO Rolling Insurance is an annual policy whose premium depends on the turnover of the company for the past year. This solution is ideal for companies involved in regular goods transport that want to ensure continuous protection for their cargo throughout the year. The insurance premium is calculated based on the value of the goods transported over the year. This solution offers convenience in long-term protection, as there is no need to enter into an agreement for each transport, which saves time and ensures constant protection.

Who should purchase CARGO insurance?

Goods owners are the main beneficiaries of CARGO insurance. They are responsible for concluding the policy to protect their goods from transport-related risks. On the other hand, carriers have the option of taking out CARGO insurance on behalf of the cargo owner if they obtain the appropriate consent.

It is worth emphasizing that the cargo owner is always the person entitled to seek compensation in the event of damage. CARGO insurance aims to protect their interests, which is why the cargo owner is usually indicated on the policy as the beneficiary.

CARGO insurance vs OCPD

It is also important to differentiate between CARGO insurance and OCPD, as they serve different functions:

1. CARGO insurance is designed for goods owners and they are the main beneficiaries of compensation in the event of damage to the goods. Cargo owners should take out a CARGO policy to ensure complete protection for the transported goods.

2. OCPD insurance is dedicated to carriers and protects their liability in the event of claims related to damage or loss of goods. OCPD is carrier's liability insurance, which covers costs associated with potential claims from goods owners.

Although a carrier can take out CARGO insurance, the goods owner is ultimately the beneficiary of compensation from this policy. On the other hand, if the carrier has the appropriate OCPD insurance, they will receive financial protection in the event of claims from goods owners.

Advantages of CARGO insurance

1. Financial protection – CARGO insurance provides goods owners with reimbursement for part or all of the value of the goods in the event of damage, allowing them to minimize financial losses associated with damage or loss of cargo.

2. Certainty and peace of mind – Goods owners can sleep soundly knowing that their cargo is adequately protected, reducing the stress associated with transport.

3. Broad risk coverage – CARGO insurance encompasses a wide range of risks, such as road accidents, theft, mechanical damage, weather conditions, or improper storage of goods. This provides comprehensive protection for goods owners.

4. Safety in business relationships – Transport companies that have appropriate insurances gain greater trust from clients who feel secure entrusting their goods to them. Good insurance demonstrates that the carrier is professional and ready to take responsibility for their actions, which can translate into long-lasting and stable business relationships.

Summary

CARGO insurance is an essential element in protecting goods during transport. Goods owners should take out the appropriate policy to protect their goods from the risk of damage, destruction, or loss. On the other hand, carriers should ensure appropriate protection in the form of OCPD insurance, which protects their interests in the event of claims from goods owners. With appropriate insurance, comprehensive protection can be provided for both goods owners and carriers, minimizing the financial risks associated with transport.

Remember, well-chosen insurance is an investment in the safety and stability of your business. Feel free to contact me! My team of insurance advisors will promptly prepare a non-binding insurance quote.

Mateusz Kasperski
Head of SKAT Insurance Department
P + 48 58 776 58 75
M +48 661 500 070
E m.kasperski@skat.com.pl