If your company import or export products to other countries, then you need to know about import export insurance. Freight insurance in one of the policies of import export insurance. The exporter or importer may suffer financial losses if the goods are damaged during transportation from the port of shipment to the destination.
The exporter or importer may need to take out insurance to protect the goods from physical damage this is what cargo insurance means. When goods are transported by sea, insurance is called marine insurance. The term cargo insurance is used in air freight. Both cargo and marine insurance are related to freight insurance.
What is Freight Insurance?
The insurance that covers the damage of goods in any circumstances during transit, whether it is through the air or sea is known as freight insurance. Big companies import or export products to other countries to get good profits. However, dealing with international clients may come with a risk. Because of the risk import, export insurance policies like freight insurance is so important.
Types of Import Export Insurance
Getting an insurance policy for your import export business is very good, but first, you need to know about the types of insurance involved in the import export business.
- Import Export Credit Insurance
- Freight Insurance
- Currency Conversion Insurance
- Product Liability Insurance
- Political Risk Insurance
Import Export Credit Insurance
Import export credit insurance protects the policyholder in case the international client fails to pay for the goods. This policy is very important if the buyer is unable to fulfill his side of the payment agreement for any reason. Despite many advantages, this is the reason why new importers and exporters are afraid of doing international business. Import export credit insurance covers the risk of the payment.
When the goods leave the factory of the exporter to the port of importer, there is so much that could go wrong. This is the best form of freight insurance to secure all these points and ensure the safe delivery of products to the customer. This insurance covers the goods that are lost and damaged during transit, and it also covers the injuries caused by the goods while handling and transit. This is the most important type of insurance in the import export business.
Currency Conversion Insurance
The major factor that traders forget about is currency conversion. Foreign currency conversion loss results in a great loss for the import export traders. Conversion may affect the whole calculation you made before the import export order. Currency conversion insurance covers any loss you face from the currency conversion. This seems essential because no one can predict the future of any currency, and the smallest change in the currency rate may result in the big change and loss in the foreign trade.
Product Liability Insurance
What happens if the products you ship to another country do not meet local legal requirements or are damaged? Simply put, you face losses or get back your investment through international product liability insurance. Liability insurance does not apply to the traders who do not do their research properly about the company and the product. It is only applied when you have done the full research about the product and the company.
Political Risk Insurance
This is a particularly important type of insurance that covers the traders working in international markets. These countries are usually very vulnerable to government authorities, which can lead to confiscation or non-payment of goods. Such governments unintentionally pass the laws that can block normal money transfer channels outside the country or even take away business assets. Political risk insurance covers the loss against the risk due to political instability, riots that might cause the damage and loss of goods.