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Why Use Insurance for Shipping from China? | Importer’s Guide

Why Use Insurance for Shipping from China? | Importer’s Guide

The freight contract, may or may not include the policy depending upon the incoterms used for the move. Much of the time it is not, and it is the duty of the customer to check if the shipment has or does not have insurance. And, where appropriate, he should apply for insurance. There are also no unique insurance policies that cover your goods in detail. In this article by DDPCH, we will talk about insurance for shipping from China. 

What is Freight Insurance?

Freight insurance for shipping from China is legally a deal between an insurance provider and the holder of the insurance. All carriers must bear a minimum amount of protection, known as “Carrier Liability.”

But the liability of the carriers bears with it a tiny coverage. It is called the “Hull Insurance”, which protects the ship’s body, its machinery, and often its crew from natural disasters, incidents in ships, or war actions. As you understand the shipments in this situation are not under protection, so we can not claim it’s a secure coverage.

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Shippers may also demand a cargo cover to protect their goods from loss, injury or theft. The goods are usually shielded by the insurance for shipping from China during their warehousing and transportation before they reach their destination.

Insurance for Shipping from China Calculation

Costs for freight insurance take into account a number of variables, including the value of the product, the origin and destination points, and even the failure history of the carrier. Transport mode is a factor, too. For example, insurance on ocean shipments can be more costly than on air shipments, because, for an extended period of time, products are exposed to various dangers.

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Commodities considered to be “high theft risk” are more costly to insure. Let’s assume you are shipping electronics, for example, mobile phones or laptops. Those products are high-risk due to the loss and theft potential. On the other side, the chance of theft is small if you are shipping plastic tables or cheap toys, which brings down insurance premiums.

The packing method of the products also impacts pricing. For instance, the price for products in crates or barrels may be more reasonable than goods that are in shrink-wrap and thus more vulnerable to both harm and theft.

Calculating the insurance rate allows you to know all the factors involved so let’s look at an example to give you a sense of possible pricing. First, below are the most common variables you would need to remember to better understand the price of freight insurance:

  • Freight (the cost of shipping
  • Price of goods 
  • The insurance rate (the insurer provides)

In conclusion, injuries are possible. Shippers, therefore, have to apply for freight insurance for shipping from China to protect their company when bad accidents occur. Do not hesitate to contact DDPCH if you want to learn more about the precautions specific to your situation!

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