GROUP ASSIGNMENT

KEITH BOSIRE MATUNDURA : HDE121-C004-0236/2020

OKEYO STEACY ANNA: HDE121-C004-0295/2020

JOAN SADA ACHIENG: HDE121-C004-0399/2021

KEVIN MUGO MAINA : HDE121-C004-0325/2020

DOROTHY OKUKU: HDE121-C004-0404/2021

CARGO INSURANCE
Cargo insurance is the method used in protecting shipments from physical damage or theft.
In fact, insuring cargo ensures that the value of goods are protected against potential losses
which may occur during air, sea or land transportation.

Types of Cargo Insurance

Cargo insurance can be taken for international as well as domestic transportation. At the same
time, this is really difficult to standardize and control without the proper cooperation from
countries and states due to the varying nature of this insurance. Under these variations, this
insurance can be categorized into the following classifications:-

Land Cargo Insurance: This insurance provides coverage for all the land transportations
covering trucks and other small utility vehicles. The coverage aspects are theft, collision
damages, and other related risks. This insurance is domestic in nature and normally, operates
within the boundaries of the nation.

Marine Cargo Insurance: This insurance covers transportation carried our either in sea or by
air. Here, means of transportation and goods are covered from damage due to cargo
loading/unloading, weather contingencies, piracies, and other relevant issues. Mostly, this
insurance covers international transportation. Under these insurances, there are some policies
that can help you in understanding the concept of cargo insurance in a profound manner. These
policies are:-

 Open Cover Cargo Policies: When the insurance holder opts for coverage against various
consignments, then open cover cargo policies get activated. These policies are segmented
into two categories namely renewable policy and permanent policy. Renewable policy is
required for a particular value requiring renewal after policy expiration. Most of the
single trip or voyages fall under this category. Permanent policy can be drawn up for a
decided time period permitting countless shipments in that period.
 Specific Cargo Policies: When a company approaches an insurance company or broker
for insuring a particular consignment, then it can fall under the category of specific cargo
policies. These policies are also termed as voyage policies because only shipments are
covered under them.
  Contingency Insurance Policy: There are certain cases where the customer, not the seller
is responsible for insuring the goods against loss or damage. There are perils associated
with it if goods get damaged during transit and the customer refuses to accept them. In
few cases, some customers do not insure the goods and tend to avoid the liability. Under
such circumstances, affected sellers can seek rectification with the help of the legal
system. This can be very costly for them and sometimes, they may lose the case.
Therefore, sellers are advised to go for contingency insurance which has a very less
premium rate. For testing and verification, sellers need not tell about it to their customers.

Benefits of Cargo Insurance

Cargo insurance covers transits carried out in the water, air, road, rail, registered post parcel, and
courier. Following aspects are covered under the benefits of this insurance:

All Risk Coverage

This coverage provides extensive protection against damage or loss due to external factors.
Though this is called all-risk coverage still, people should know the aspects included and
excluded in the policy. Under all-risk coverage, included aspects are:

 Damages due to inappropriate packing

 Infestation
 Cargo abandonment
 Customs rejection
 Employee’s dishonesty

Free From Particular Average Coverage (maritime insurance-related)

“Free of particular average” coverage clause excludes coverage partial losses to the cargo or to
the hull except those resulting from stranding, sinking, burning, or collision. Another important
aspect of this clause is that the shipper does not pay for minor losses (pre-decided percentage)
and is only held liable in case of significant losses to the cargo. This insurance coverage belongs
to a special category and covers particular perils only. There is a difference in coverage
depending upon the storage location of the cargo. In this policy, the following perils are
included:

 Collision
 Heavy weather
 Sinking
 Derailment
 Non-delivery
 Theft
 Fire
 Earthquake

General Average Coverage

This coverage is a basic requirement in the marine cargo transits. More specifically, it covers
only partial loss occurred to the shipment. It requires all the other cargo holding owners on the
ship to pay compensation to the periled cargo owner.

Warehouse to Warehouse Coverage

This coverage is applicable when a shipment is unloaded from the ship and gets transported to
the customer’s warehouse. Insurance companies are very particular about compensating only the
insurance holder’s cargo, not other owners’ cargos.