Choosing the Right Cargo Insurance: Avoiding Costly Mistakes

When it comes to cargo insurance, choosing the cheapest option isn’t always advisable. Many shippers unknowingly select ICC-C coverage, thinking they’re covered—only to find out too late that their policy doesn’t protect against common risks. 

While ICC-C may be the most affordable option upfront, it only covers extreme situations, such as total loss due to a plane crash or a vessel sinking.

For businesses that rely on secure and reliable shipments, making an informed decision about coverage levels is critical. Understanding the differences between ICC-A, ICC-B, and ICC-C can help prevent unexpected financial losses.

Breaking Down Coverage: ICC-A, ICC-B, and ICC-C

  • ICC-A (All Risk) – The most comprehensive coverage. Protects against theft, damage, loss in transit, and more—the best option for high-value or fragile items.
  • ICC-B – Mid-tier coverage. Excludes some risks covered under ICC-A, such as partial losses from external factors.
  • ICC-C – The cheapest option. It only covers major disasters like vessel sinking, fire, or total loss—leaving cargo owners vulnerable to theft, damage, or minor incidents.

Example: If you’re shipping a high-theft item like electronics, ICC-C won’t cover theft. Without ICC-A, you could be left without recourse if your shipment disappears in transit.

Another common mistake? Shipping used goods and simply defaulting to new general merchandise when purchasing insurance, without realizing that your cargo may in fact require special approval by your underwriter. Further, your specific commodity may even be excluded altogether if it is not an available option when purchasing insurance. If your online insuring platform does not list your commodity, we recommend confirming coverage with your insurance representative.

Why Investing in Better Coverage Makes Sense

Many shippers assume that ICC-A is significantly more expensive, but in reality, the price difference is often just a few dollars more per shipment, depending on the overall value of cargo insured and if a standard transit route. Given the financial risk of loss or damage, opting for better protection is a small price to pay for peace of mind.

For companies unsure of the right policy, working with insurance specialists like Arete helps ensure your cargo is protected without unnecessary costs. Reach out today for more information and best practices from your friends at Arete.

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What is a Third-Party Adjuster (TPA) and How Do They Handle Your Claims?

If you’ve ever had to deal with an insurance claim—especially in the freight and logistics industry—you may have come across a third-party adjuster (TPA). But what exactly do they do, and how do they fit into the claims process? Whether you’re a freight forwarder managing claims, a policyholder navigating an insurance issue, or a new professional in the logistics industry, understanding the role of a TPA can help you handle claims more effectively.

A third-party adjuster, like Arete Adjusting, is an independent entity hired by an insurance company to investigate, evaluate, and resolve claims on their behalf. While TPAs work closely with policyholders and claimants to assess damages, collect documentation, and process claims, it’s important to remember that their ultimate responsibility is to the insurance company. Their job is to ensure the claim is handled according to the policy terms, industry regulations, and best practices.

So, what happens when a TPA is involved in your claim? Once a claim is filed, the TPA steps in to review all relevant information, inspect damages if necessary, and gather documentation from all parties involved. This can include everything from bills of lading and freight records to accident reports and repair estimates. They may also coordinate with surveyors, appraisers, and legal experts to ensure a thorough evaluation. After gathering the necessary details, the TPA determines how much of the claim is covered under the policy and works with the insurance company to finalize the payout or resolution.

For freight forwarders and logistics professionals, this means that if cargo is lost, damaged, or delayed, a TPA will likely be the one guiding the claims process. While they are there to assist in navigating the claim, it’s important to provide clear, well-documented evidence to support your case. TPAs follow strict procedures and timelines, so staying proactive and organized can help ensure a smoother resolution.

At the end of the day, TPAs serve as a bridge between the insurance company and the claimant, ensuring that claims are handled efficiently and in compliance with policy terms. If you ever find yourself working with a third-party adjuster, knowing their role in the process can help you better manage your claim and expectations. If you have questions about how TPAs work or need assistance with claims, Arete Adjusting is here to help.

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Mitigating Liability in the Logistics Industry

Liability is an ever-present concern in the logistics industry, where complexities in transportation, warehousing, and cargo handling expose companies to significant risks. From accidents to mismanagement of goods, liability issues can disrupt operations and strain financial resources. Companies welcome proactive insurance brokers who get to know a cargo owner’s entire supply chain in order to provide not just the best options, but also make better emissaries for, and customers of, the broker, when it comes to seeking coverages. 

Common Liability Issues in Logistics

Liability in logistics often stems from accidents involving vehicles or equipment, damage to cargo, and delays or errors in the supply chain. For example, warehouse accidents such as forklift mishaps or improper stacking can lead to injuries and damaged goods. Similarly, transportation incidents involving road collisions or improper cargo securement can expose companies to costly claims.

Cargo theft is another growing concern, particularly for high-value and easily fenceable goods. Whether in transit or at rest in storage facilities, theft exposes logistics providers to both financial and reputational risks.

Where Arete Sees Opportunities for Improvement 

Based on the claims which we receive, they can be put into a handful of categories, all of which have room for improvement through better communication, better documenting of processes and knowing where the line is between making a customer happy and creating jeopardy for the insurer and/or their broker. 

  1. Accident Prevention: Ensure proper initial and recurrent training for employees handling cargo, operating equipment, and driving vehicles. Implement regular safety inspections and maintain equipment to reduce the risk of malfunctions.
  2. Contractual Clarity: Clearly define liability responsibilities in contracts with clients, carriers, and suppliers. Ensure that insurance policies cover potential gaps in liability exposure. Perhaps most importantly, do not enter into a contractual agreement that involves redlining and altering your standard terms and conditions without securing the approval of your insurer first. 
  3. Technology Integration: Utilize passive and active tracking and monitoring systems to maintain visibility over shipments and mitigate delays, theft, or mismanagement risks.
  4. Compliance Adherence: Stay updated on industry regulations and ensure compliance with safety and environmental standards to minimize legal exposure.

Insurance Brokers Can Reduce Liability 

Insurance brokers are the first line of defense for the insured and the forwarders seeking coverage on their behalf. At Arete, we have the data to support their efforts to present solutions based on a deep history of the nature and types of claims we have been nominated to handle. They are the professionals in the relationship with their insured. As professionals, they are as much the subject matter experts on liability reduction as their customers are on best routes or customs classifications. 

Arete is pleased to support our customers in ways that are appropriate to our role in the insurance industry and have built up a deep roster of talented individuals and organizations to direct our customers for greater or more specific help if and when the need arises. 

Insurance as a Safety Net

Insurance is a critical component of any risk management strategy. Tailored coverage mitigates financial losses from accidents, theft, or delays. Your insurance broker can guide companies in structuring insurance policies that align with your operational risks, providing a safety net against unforeseen events.

By taking a proactive approach to liability, logistics companies and their insurers can reduce risks, protect their assets, and maintain a competitive edge in a demanding industry. Contact us today to discuss liability risks in logistics and how you may be able to get ahead of the curve.

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Seasonal Cargo Routes and Insurance Considerations

Shipping cargo along seasonal routes requires careful planning, especially considering differing insurance requirements and potential pitfalls. Winter and summer present unique challenges for shippers and forwarders, making it essential to adapt to seasonal conditions and mitigate risks effectively.

Winter Shipping Considerations

Winter cargo routes often expose goods to extreme weather conditions, including freezing temperatures, snow, and ice. Delays caused by storms and hazardous road conditions can increase transit times and the risk of damage. Temperature-sensitive items, such as perishables and electronics, face heightened vulnerability during winter. Shippers must invest in temperature-controlled containers to safeguard these shipments and ensure that insurance policies cover potential losses from weather-related delays or spoilage.

Ports and railways operating in colder climates may experience disruptions, requiring forwarders to plan alternative routes. Comprehensive insurance policies are critical during this season, particularly those covering damage caused by extended transit times or exposure to extreme weather.

Summer Shipping Challenges

Conversely, summer presents its own set of hurdles. Heat-sensitive goods, such as pharmaceuticals and certain food items, are at risk of spoilage during transit. Heatwaves and tropical storms can disrupt schedules and damage goods. Forwarders must prioritize refrigeration and cooling systems for temperature-controlled shipments while securing insurance coverage for risks specific to warmer climates.

High shipping demand during summer’s peak season also strains capacity, increasing the risk of delays and mismanagement. Properly evaluating carrier reliability and maintaining clear communication with insurers can reduce exposure to financial losses.

Tailored Insurance and Risk Mitigation

Each season requires a tailored insurance approach. Freight forwarders should account for route-specific risks, such as extreme cold, heat, or transit delays. Collaborating with your insurance broker ensures that insurance policies align with operational realities and provide adequate protection against seasonal risks.

Shippers and forwarders can ensure smoother operations and financial stability throughout the year by understanding seasonal challenges and proactively managing risks. Internally discussing and better understanding your company’s own trading routes is essential for mitigating seasonal cargo risks.

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Preserving Evidence: The Key to Successful Cargo Claims

Shipments moving internationally travel long distances across multiple modes of transportation. Depending upon the mode – sea, air, rail or truck, cargo is subject to different forces. Sea freight has the rise and fall from waves and the pitch and yaw of the ship. Containers on rails are jarred forwards and backwards as trains accelerate and decelerate. If the packing is substandard or space is left for the goods inside to move freely, the potential for damage is present and possible. Add a heightened and active environment of cargo theft as it exists today, insuring cargo is more important than ever. 

In the event of damage or even a partial or total loss in transit, proper evidence preservation is crucial for ensuring a smooth claims process and maximizing your chances of being made whole for the loss. 

Arete offers this simple ten-point checklist, which we have refined over time, to help you cover your bases and quickly settle a claim. This allows us to pursue possible subrogation against the entity that had the cargo in its possession at the time.

  1. Document the Damage Immediately

As soon as you discover any damage or loss, document it thoroughly. Take clear, well-lit photographs from multiple angles, capturing both the overall scene and close-up shots of specific damage. Everyone these days has a phone with a camera that can be used to take photographs. 

Be sure to sign the delivery receipt with appropriate, detailed exceptions such as “hole in container” or “all cartons crushed.”These visual records are invaluable for claims adjusters.

  1. Keep All Packaging Materials

Don’t discard any packaging, even if it seems undamaged. The condition of boxes, crates, and internal packing materials can provide vital information about how the damage occurred.

  1. Maintain a Detailed Inventory

Create a comprehensive list of all damaged or lost items. Include descriptions, quantities, and, if possible, individual item values. This inventory will be essential for accurately assessing the claim’s value.

  1. Segregate Wet from Dry Cargo

Sort wet from dry cargo and thoroughly document the interior condition of the shipping container. Close the doors and see if light enters the container and document the location. Contact your adjuster directly for additional guidance.  

  1. Collect and Organize All Relevant Documents

Gather all paperwork related to the shipment, including:

  • Bill of lading
  • Commercial invoice
  • Packing list
  • Insurance certificate
  • Any correspondence with the carrier
  • Signed delivery receipts noting any visible damage.
  1. Record Witness Statements

If anyone witnessed the damage occurring or discovered it, obtain their written statements while the event is fresh in their minds.

  1. Notify All Relevant Parties Immediately

Because of strict time limits to report claims, it is important to inform your insurance provider, the carrier, and any other involved parties in writing as soon as possible. Many policies have strict time limits for reporting claims.

  1. Mitigate Further Damage

While preserving evidence, take reasonable steps to prevent further damage to the cargo. This might include moving goods to a dry area or applying temporary protective measures.

  1. Keep a Chronological Record

Maintain a log of all actions taken, conversations had, and decisions made regarding the damaged cargo. This timeline can be crucial for the claims process.

  1. Consult with Claims Professionals like Arete

On each insurance certificate, you’ll find the adjuster’s name to contact in the event of a claim. Our role is to establish the facts and determine the payable amount of loss so that the insurer can pay the claim. 

Following these evidence-preservation steps significantly increases the likelihood of a successful cargo claim. Remember, the more information and evidence you can provide, the easier it is for claims adjusters.

At Arete Adjusting, we understand the complexities of cargo claims and have established a network of surveyors and representatives who, if required, can physically examine the loss to ensure complete capture of the facts. To learn more about the role adjusters play in a cargo claim contact us today.

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What Makes a Contract Special?

From a risk management perspective, this question is answered by the contractual terms that make the policy holder pay more when they have a claim compared to when standard trading conditions apply.

Standard trading contracts are often taken from other industries that are unsuited to the transportation and logistics sectors. Signing these contracts can lead to significant financial losses, the possibility of no insurance coverage, and even bankruptcy.

The following scenarios found within standard contracts are important to pay attention to, as they can have very high-risk outcomes for the policy holder:

“You are responsible for all claims.”
What it means: Strict liability regardless of any fault or negligence.

“You are responsible for the full value of the cargo.”
What it means: No weight or package limitation, including high value cargoes.

“You are responsible for delays and consequential losses.”
What it means: No limit to freight charges and time crucial delivery.

“You have no defenses to claims.”
What it means: No reference to protection for matters beyond your control.

“You have no recovery against responsible carriers.”
What it means: Certain clauses make you fully responsible for all carriers in the chain.

“You agree to a claimant supportive legal system.”
What it means: Certain legal regimes are less favorable to logistics providers.

For More Information

Please contact our specialists: info@areteadjusting.com.

Arete Adjusting, LLC is a member of the +8 Partners ecosystem. This article was authored by Phillip Emmanuel, Chief Operating Officer at +8 Partners.

Disclaimer: All claims are subject to the terms, conditions and exclusions of the relevant product disclosure statement and/or policy.

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The Importance of Salvage

If you have a claim under your cargo or liability insurance, salvage can be a major headache for the forwarder.

When an accident occurs, the merchant is understandably upset. Their cargo is damaged, but there also may be other implications to the supply chain. Often, they will prefer to abandon the cargo and re-order a new shipment. Such behaviour can be extremely costly for both merchant and even the forwarder.

The forwarder must ensure they try to get the cargo to destination before arranging any survey or inspection. If an incident happens in the port and the cargo is deemed damaged, the merchant will most likely not want their cargo. And may not want to spend time salvaging with the belief that this is the cargo insurer’s responsibility under subrogation.

However, this is not the case. The duty to mitigate/salvage is on the merchant – not the insurer. Subrogation is only after the insurers have settled the case.

This misunderstanding may result in expensive storage / demurrage / disposal / labour charges that insurers are unlikely to compensate. Therefore, we would always recommend ensuring the cargo arrives at destination before any survey is undertaken.

Any delay may also prejudice the claim, especially if it involves perishables. The insurer’s surveyor may help, but if the merchant refuses to cooperate, then this will be a total loss in a very short time. Whilst insurers will not override a decision by the health department to condemn cargo, often the discretion is on the insurer to decide. Perishables may be condemned for human consumption, but they will have a secondary market under animal feed, and this is where complications occur. There is still salvage, and it is not deemed a total loss.

Ultimately, speedy action on finding salvage buyers results in the claim being paid faster with less costs. It’s also common for the merchant to make a salvage offer for cargo that may fall outside its original market, but they still have a use for. This can make adjusting the claim even quicker and simpler.

Salvage is the number one reason for delay on claims adjusting, so it is imperative to involve the broker as soon as a dispute arises.

For questions or more information regarding salvage, please contact our specialists: info@areteadjusting.com.

This article was written with +8 Partners member company World Insurance Services, Inc. and authored by Richard Kamppari Baker, Claims Director at World Insurance. Arete Adjusting, LLC is a member of the +8 Partners ecosystem.

Disclaimer: All claims are subject to the terms, conditions and exclusions of the relevant product disclosure statement and/or policy.

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