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Home » Do you really understand cargo insurance?
post-conference report

Do you really understand cargo insurance?

October 1, 2009
Toby Gooley
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Many logistics and transportation managers assume that their service providers' insurance will adequately cover their shipments in case of loss or damage—a dangerous assumption that can leave them with a hefty and unexpected financial liability.

Carriers, third-party logistics companies, and warehouses do carry insurance, and they are subject to various degrees of liability for the cargo they handle. But they buy policies that protect themselves, not their customers, warned James H. Nerger, a vice president with the insurance company Roanoke Trade Services Inc. Nerger gave this advice during a panel discussion on "Using Cargo Insurance to Uncover Hidden Risks" at the Council of Supply Chain Management Professionals Annual Global Conference. "Liability is not insurance," added Theresa Garcia, also a Roanoke VP. "That is protecting [carriers] against their own negligence. It is not insuring your cargo."

That may have been the most important lesson attendees learned in the session, but there were many more. Here is just a sample of what the panel of four insurance executives shared with the audience:

  • Brokered freight can be subcontracted. Make sure insurance coverage still applies when an additional party is involved.
  • "Warehouse to warehouse" coverage ends with delivery at the receiving warehouse. If freight will be stored for even a short time, get coverage for storage and staging.
  • Shippers often buy inadequate insurance based on incorrect or outdated assumptions. This typically occurs because of a lack of communication between those who are responsible for arranging coverage and those who know the shipment details.
Transportation Transportation 3PL
KEYWORDS Roanoke Trade Services Inc.
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    Contributing Editor Toby Gooley is a writer and editor specializing in supply chain, logistics, and material handling, and a lecturer at MIT's Center for Transportation & Logistics. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.

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