International Freight Forwarder and Customs Broker Based in China



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Insurance in general is the “Protection against future loss”. insurance is available to ships, boats and most importantly the cargo that is being carried into any mode of transportation.

Marine insurance is very important because among the four mode of transportation ( road, rail, air and water) ocean cargo is more likely to cause a lot of concerns to carriers, not only because there are natural phenomena that can affect the cargo and the ship, but also other incidents and signs that can cause significant damage to the carrier and the transport company.

The main advantage of marine insurance is that the carrier may choose an insurance plan depending on the size of the vessel, routes taken by the vessel for the carriage of cargo and many other secondary points that can significantly affect the carrier in general.

In addition, since various plans and policies indicate not only covering the cargo, but also the vessel. the carrier can choose and use the policy that suits him and his business.

Many importers believe that this insurance should be managed by their carriers. However, if you are not engaged in cargo insurance, it is difficult to guarantee that the correct type and amount of insurance has been placed on your shipment.

China is leading the maritime insurance:

The rapid growth of China’s maritime trade has led to the development of its insurance sector, in which significant steps have been taken in recent years to raise standards.

China is currently the largest cargo insurance market and the second largest home insurance market, mainly due to China’s strong economic growth since the country was added to the organization. world trade.

Why you should purchase cargo insurance:

Many are trying to save money by not insuring their cargo, but here’s five of the many reasons why you should take insurance into consideration.

Reduce exposure to financial loss

If you are an exporter who has not been paid for the goods at the time of shipment or an importer who has paid for all or part of the goods before they are received, you risk a financial loss if the goods are lost or damaged during transit.

General average – Expedite the release of your cargo

You may need to send a security deposit and / or cash deposit in order to receive an average release of your cargo, even if there is no loss or damage to your property. By taking out insurance, your insurance company takes responsibility for this and speeds up the clearance of your shipment. The overall average value is the generally accepted international principle that if a ship has certain types of accidents, all parties share the loss equally.

Contractual requirement

In your sales contract, you may need to purchase marine insurance to protect the interests of the buyer or their bank. This is especially true when selling CIP or CIF products. Failure to comply with this requirement may result in financial loss if the product is lost or damaged. However, failure to comply with the terms of your contract with the buyer can lead to loss of sales and legal problems.

Coverage for limited carrier liability

Under the law, carriers are not responsible for many common causes of loss occurring during transit (eg natural disasters, common features, etc.). And, even if they are responsible, the carriers’ liability for loss is limited – either by contract in the bill of lading or by law. In most cases, you will only recover cents from the carrier.

Have more control over insuring terms

Reliance on the insurance of the buyer or seller may be a viable option, but you must be sure that the insurance was purchased, and that the conditions, cost and insurance limits provided by each insurer for each dispatch meet your needs. And, if the requirement is for a foreign insurance company, perhaps in a different language, it can take a lot of time and disappoint. If there is a problem with claims, you often deal with foreign courts.

Whether importing or exporting, by air, ocean, or even trails for your international transport, sea cargo insurance covers the loss and / or damage to cargo during transit between the point of origin and final destination.

CIF + 10%

(Commercial invoice value + insurance costs + freight= CIF value x 110% (10% for any unforeseen costs or charges))

This type of insurance covers your shipping costs too in the case of damage or loss where the repair or replacement must be done somewhere other than the consignee’s location. Recoverable freight charges may be prorated based on the portion of the shipment damaged in the case of partial loss/damage.

If there is damage and the repair occurs at the final destination of the goods (consignee’s facility), no freight charges are refundable.

Practical demonstration:

For most destinations and commodities PWS sells insurance for $0.60/$100.00 insured value with a $12.00 minimum.

Sample insurance of goods + freight charges:

Commercial Invoice value = $10,000.00
Insurance Cost = $60.00
Freight Cost: $500.00
Total CIF Value = $10,560.00 x 110% = $11,616.00 = Amount to Insure

What does the cargo insurance covers?

Perils of the sea:

– natural disaster

– Accidental accidents

Ocean Losses and costs

– ocean Loss

– Ocean cost

– Sue and labor costs

– Rescue costs

– The degree of loss of property can be divided into total losses and partial loss.

– By the nature of the loss of goods it can be divided into general average and particular average

–  Determination of the total average and average

– General Average Conditions

–  The difference between a general average and a particular average: the cause and the responsibility are different.

– Total average contribution

The beneficiaries of the total average contribution are: the owner of the goods, the shipowner and the carrier.

There are two basic principles of a general contribution: a contribution subject to actual losses or additional expenses; The losing party or the non losing party contributes to the share of the total standard value of the goods.

Exclusion of an insurance company

– Intentional actions or loss of policyholder’s negligence

– Responsibility for losses is borne by the shipper

– Loss of poor quality or small assets before insurance liability is valid.

– Losses of the insured property, natural losses or defects, characteristics and reduction of the market price, losses and costs caused by delayed transportation.

Important to know !

There are five exceptions that a motor carrier can use to deny liability for freight claims. The burden of proof is on the motor carrier to prove that one of these five conditions was met and that cargo damage was not due to their negligence.

Act of God:

Act of god defense is applied when the carrier can prove that the damage was caused by a physical phenomenon or a natural disaster that he cannot control. Some examples: the wind blows on a trailer, a tornado or a flood, or a driver has a heart attack.

All weather conditions are not considered “Act of god” in accordance with the Carmack Law. The violation must be of such unexpected strength and seriousness that the carrier could not take protective measures against it.

As stated in Standard Brands, Inc. c. Nippon Yusen, the carrier may be liable for any transport claims arising.

The “public enemy” or the “act of war”:

If the damage is caused by hostile acts of the armed forces that are enemies of the government, the carrier cannot be held responsible for cargo claims. War crimes fall under this exception, but organized crime does not exist. Terrorism may be part of this exception, but there is currently no case law to determine how the Carmack amendment will be applied in such situations.

Act of public authority:

The Carmack Amendment is another exclusion of carrier’s liability if the government (“public authority”) damages the transportation. Under this exemption, policies such as quarantine, road closures, product recalls or trade embargoes are applied.

Inherent vice:

A good with an “inherent vice” is that it is naturally subject to defects, disease or degradation, which can worsen over time. Examples of such products include fruits and vegetables, cheese and tobacco.


It is incumbent on the carrier to demonstrate that the damage was caused solely by the “inherent vice” in the goods and not by their own negligence, for example, failure to comply with the shipper’s instructions for processing.

Act of shipper:

Act of shippers are mostly associated with improper loading or packaging. However, the general principle is that the shipper’s error may not be obvious under normal observation; if so, the carrier is obliged to refuse shipment.

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About SINO

SINO Shipping is a trusted international freight forwarder with over 35 years of experience, offering a full range of logistics and transport services. With a strong presence in China and a commitment to efficiency, reliability, and customer satisfaction, SINO Shipping ensures stress-free and cost-effective logistics solutions for businesses worldwide.

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