Explanation of the basic of Cargo Insurance！Insured Amount and how to calculate Insurance Premium

Summary

This video provides an introduction to cargo insurance, explaining its importance in international logistics. It covers the basics, including the definition of cargo insurance, key terms such as insured amount, insurance premium, and the types of coverage available. The video also demonstrates how to calculate insurance amounts and premiums with an example, emphasizing the need for cargo insurance to mitigate risks during transportation. The presenter encourages viewers to learn these essential concepts to arrange cargo insurance efficiently and stay updated on international logistics practices.

Takeaways

• 😀 Cargo insurance is crucial in international transportation due to unforeseen risks and accidents that may occur during transit.
• 😀 Cargo insurance covers risks such as water damage, human error during reloading, and other possible transportation issues.
• 😀 The insured amount is typically 110% of the CIF (Cost, Insurance, Freight) price listed on the invoice.
• 😀 Insurance premiums are calculated by multiplying the insured amount by a rate of 0.3% to 0.5%, depending on factors like route and type of goods.
• 😀 The minimum premium per case is generally about 30 US dollars, with additional charges possible under conditions like war or strikes.
• 😀 There are two main types of insurance coverage: total loss (all cargo is lost) and partial loss (only part of the cargo is damaged).
• 😀 The type of insurance policy affects the premium: policies that cover more risks, like all-perils, typically cost more.
• 😀 When applying for cargo insurance, it's important to provide details such as the shipment destination, method of transport, and product value.
• 😀 A sample calculation for cargo insurance involves adding the product price, domestic fees, and ocean freight to get the CIF price, then multiplying by 110% for the insured amount.
• 😀 Using the example of machinery from Thailand to Tokyo, the CIF price would be 12,650 US dollars, and the premium (at 0.3%) would be around 37.95 US dollars.
• 😀 Cargo insurance is an essential part of managing risks in international logistics, helping ensure protection for shipments against unexpected events.

Q & A

What is cargo insurance?

Cargo insurance is an insurance for import and export cargo that covers unforeseen accidents and risks during transportation, especially in international shipping where the risk of damage is higher due to longer distances and more transshipments.

Why is cargo insurance recommended for international transportation?

Cargo insurance is recommended because international transportation involves various risks, such as water damage, human error during loading, and long-distance shipping, which increases the likelihood of cargo damage or loss.

What are some common risks covered by cargo insurance?

Cargo insurance covers risks such as water damage to containers on ships and human errors when reloading containers onto trucks. It also covers other unforeseen accidents that may happen during transportation.

What are the two types of cargo insurance coverage?

The two types of cargo insurance coverage are 'Total Loss,' which covers complete loss of cargo, and 'Partial Loss,' which covers damage to a part of the cargo.

What is the insured amount in cargo insurance?

The insured amount is the maximum amount that can be paid out by the insurance company in case of an accident. It is usually 110% of the CIF (Cost, Insurance, and Freight) price listed on the invoice.

How is the insurance premium calculated?

The insurance premium is calculated by multiplying the insured amount by the premium rate, which typically ranges from 0.3% to 0.5%. The minimum premium per case is around $30.

What are the factors that influence the premium rate for cargo insurance?

The premium rate depends on factors such as the transportation route, type of goods, and the risks associated with the cargo. For example, goods shipped through areas prone to war or strikes may incur additional premiums, known as the war and SRCC rate.

What is the CIF price in cargo insurance?

The CIF price is the total cost of the product, including the cost of transportation to the import port, customs clearance, and ocean freight. The insured amount is 110% of the CIF price.

How do you calculate the insured amount for cargo insurance?

To calculate the insured amount, add the value of the product, domestic fees, and ocean freight to determine the CIF price. Then, multiply the CIF price by 110% to get the insured amount.

What should be considered when filling out an insurance application?

When filling out an insurance application, you need to provide details such as the destination of the shipment, method of transportation, the product's invoice amount, and the name of the item. These details help in determining the insurance coverage and premium.