Q:

What factors go into the cost of cargo insurance?

A:

Quick Answer

The method of transport, shipping route, time of the year and safety risks factor into the cost of cargo insurance, according to Wyvern International Insurance Brokers. The choice of insurance clause and the carrier used significantly affect the rates charged on cargo.

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Full Answer

The insurance clause the assured selects determines the cost of cargo insurance. The assured opts for a clause that matches his needs, such as an average clause offering basic cover at a reduced cost or a comprehensive clause covering damage to cargo due to aspects such as inclement weather, fire and assailing thieves, details Wyvern International Insurance Brokers.

Geographical or political conditions pose diverse risks to shippers, with politically unstable or challenging terrain at the destination or origin of cargo ramping up the cost of insurance, according to Wyvern International Insurance Brokers. The method used to transport cargo attracts different insurance rates, and shipping routes pose diverse risks, which affects insurance costs, according to Cargoinsurance.com.

Bad weather, such as wintry conditions and the monsoon season, can damage cargo during shipping and raises the cost of insurance at certain times of the year, notes Wyvern International Insurance Brokers. Using a vessel that varies from the industry-recognized tonnage and age attracts additional insurance premiums.

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