How transport operators can differentiate themselves by offering cargo insurance
Discover how you can keep customers satisfied, reduce your business risks and stand out in the competitive logistics market by offering cargo insurance.
With thousands of freight forwarders and logistics providers in Asia Pacific, it is a real challenge to stand out from the competition.
These days, shippers have numerous options at their disposal to move their freight around the world.
So how can you differentiate yourself from other transport operators? What should you do to attract new customers and keep existing customers satisfied with your services? Do you provide value-added services like cargo insurance? Do you incorporate cargo insurance as part of your process to reduce your business risks?
Freight liability vs Cargo insurance
Let’s start by clearing up a common misconception – the difference between freight liability and cargo insurance:
- Freight liability
If there is no cargo insurance in place, the shipment of your customer is subject to your standard trading conditions, where limitations of liability and exclusions apply. In the case of a loss to the goods under your responsibility, the compensation will be determined by the trading conditions. Hence, your customer may not receive full settlement, due to limitations (e.g. per kilogram or package) or even worse, the claim might be rejected due to exclusions (e.g. act of God or war). In addition, your customer needs to provide evidence that you are legally liable for the loss that occurred.
- Cargo insurance
With cargo insurance in place, your customer will be compensated according to the policy of insurance. In case of physical loss or damage to the goods while in transit, your customer will be reimbursed up to the full value of the goods. Also, your customer does not have to prove that you are legally liable for the loss.
Example of a total loss claim scenario
A freight forwarder was hired to arrange for a shipment of machinery valued at USD 50,000.
The shipment was received and upon further inspection, the machinery was found to be damaged. The shipper filed a claim against the freight forwarder.
Compensation limitation
Subject to the standard trading conditions, where limitations of liability and exclusions apply
Compensation amount
- For damage due to negligence by the freight forwarder: the compensation received by the shipper is USD 25,000.
- For damage due to an act of God (e.g. earthquake, flood, tsunami, storm): the shipper does not receive any compensation for its loss.
Compensation limitation
Compensation is as per the policy of insurance.
Compensation amount
Full settlement of USD 50,000
The benefits of cargo insurance
As explained above, offering cargo insurance is a real benefit for your customers as their cargo is fully protected from loss or damage during the freight movement process if an unexpected event happens.
Cargo insurance is vital for the following reasons:
- it is a difficult process to make claims against any air, road, rail or sea carriers
- there is a major hidden cost associated with the handling of cargo claims
- it removes conflicts with shippers when cargo is lost or damaged
- it removes uncertainties for shippers
- it creates goodwill with shippers
Seamless cargo policy issuance
Today, you can have access to innovative cargo insurance platforms specifically designed for the transportation industry. As a transport operator, you need cutting-edge and efficient systems to respond to customers with speed and personalised services, especially in the event of cargo claims.
Marine cargo insurance web-based platforms allow you to:
- obtain instant quotes for one-off shipments
- convert the insurance cover purchase in real-time avoiding delays and manual work
- protect your business from litigation for loss or damage to cargo
- improve customer retention by offering a value-added service to your customers
Having a fast and effective system for quoting cargo insurance is a key differentiator for your business.
Read more about how Chubb’s CargoAdvantage system can help you to offer a cargo insurance quote and cover for a shipment within minutes, or contact your local office to find out more.
The benefit(s) payable under eligible certificate/policy/product is(are) protected by PIDM up to limits. Please refer to PIDM’s TIPS brochure or contact Chubb Insurance Malaysia Berhad or PIDM (visit www.pidm.gov.my)
This content is brought to you by Chubb Insurance Malaysia Berhad, Registration No. 197001000564 (9827-A) (“Chubb”) as a convenience to readers and is not intended to constitute advice or recommendations upon which a reader may rely. Any references to insurance cover are general in nature only and may not suit your particular circumstances. Chubb does not take into account your personal objectives, financial situation or needs and any insurance cover referred to is subject to the terms, conditions and exclusions set out in the relevant policy wording. Please obtain and read carefully the relevant insurance policy before deciding to acquire any insurance product. A policy wording can be obtained at www.chubb.com/my, through your broker or by contacting any of the Chubb offices or Chubb agents. Chubb makes no warranty or guarantee about the accuracy, completeness, or adequacy of this content. It is the responsibility of the reader to evaluate the quality and accuracy of material herein.
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