While many companies are concerned about cost savings throughout their supply chains, many fail to consider the financial impact if something goes awry during transit. While logistical operations typically get merchandise or raw material to its intended destination without too much of a problem, there are risks associated with transporting freight, making it essential for firms to invest in cargo insurance.
Unexpected events do happen, and they can seriously compromise business finances, in addition to entire shipments. Ocean freight can be pirated, trucks can be stolen and planes can be hijacked, having a significant impact on a firm's logistical processes as well as its entire supply chain.
According to Entrepreneur magazine, simple mistakes by business professionals can put companies at risk for a great loss. Failing to have insurance is one major mistake, while incorrectly assuming a supplier or manufacturer's insurance policy will cover losses is another huge misstep. Overlooking small things, like forgetting to sign off on a policy or check a box can also contribute to big losses down the road if a business should encounter a problem with a shipment.
Avoiding problems with cargo insurance
It's essential for businesses to review their policies and understand exactly what their coverage consists of. This can help them from assuming a business partner's insurance policies will cover lost, stolen or ruined cargo and help cover the losses they would otherwise have to absorb.
However, having a firm grasp on a policy isn't the only step company leaders should take to guarantee proper risk management. They should also take great pains to carefully record all cargo loads and keep detailed documentation of all shipments. This can ensure that if a problem does occur down the road, a firm has proof of its losses and can avoid any major problems with insurance companies.