In case you run a business that regularly delivers to customers, particularly if you sell high-end items or sell in large volumes, shipping without insurance should not be in consideration. However, the automatic insurance provided by most major carriers is typically not enough to cover larger shipments or even the value of mid-tier goods. Third-party insurance exists to protect what basic carrier insurance does not.
This article will discuss how third-party shipping insurance differs from standard carrier liability and what its advantages are. We should note that the exact advantages of third-party shipping insurance depend on your particular insurance policy, but the general benefits are the same – the rest is nuances. In any case, we should start with the basics.
Shipping insurance is used to reimburse the sender in case their shipment was lost or damaged in transit. One option is to insure the shipment through the carrier. The other is third-party shipping insurance - when you insure your cargo through a company that is not your carrier. In other words, one company is shipping your items, while you buy shipping insurance from a third party.
Buying shipping insurance from a third-party insurance provider has 5 primary benefits: 1. the insurance rates are typically cheaper; 2. higher insurance limits are possible; 3. more types of goods are covered; 4. more causes of loss or damage are covered; 5. filing and processing claims is usually quicker and easier.
Let us expand on each point.
Once again, the exact insurance rates will vary based on your provider, but insurance companies offer specific policies where it is possible to negotiate discounted rates, particularly for bulk or frequent shippers. For relatively cheap shipments, e.g. up to $100 in value, there is usually no reason to get third-party insurance.
Most carriers provide built-in insurance (the carrier’s liability) for goods of up to $100 and offer to sell additional insurance for more expensive items. However, the insurance rates rise the more expensive the shipment is. The same is often true of third-party insurance providers, but because these companies specialize in insurance, they offer discounted policies when certain conditions are met.
Consequently, third-party shipping insurance is proportionally cheaper than carrier insurance the more expensive the shipment.
Third-party insurance providers can offer you full-value coverage for the most expensive packages. Carriers limit the upper value of items they are willing to insure. While third-party providers also have upper limits, they are set higher – companies specializing in high-end items may set the upper limit as high as $150,000.
Then, even when you buy additional shipping insurance that covers the value of your goods from carriers, it still does not mean that you will be fully reimbursed in case of loss or damage. Many carriers will only reimburse you for the repair or replacement cost, or the depreciated value of the item – usually whichever is the lowest. Third-party companies will reimburse you for the full value of the item.
Besides the higher values that can be covered by third-party insurance, it also covers more types of goods. Again, the specific types of goods that are covered will depend on your insurance policy and some items will always be excluded. For example, you will never be able to insure items that are illegal to ship (not illegal items per se, but illegal to ship).
Further, most carriers will not insure items like art, alcohol, medical equipment, many types of electronics, or collectibles. Neither will many private insurance companies, for that matter. However, based on your business, you can find companies that provide industry-specific policies that will cover the types of goods you deal in, thus your shipment can be insured.
One of the main benefits of third-party insurance is that you are much more likely to be reimbursed when your packages are lost or damaged. After all, insurance does not have a purpose if your claims are rejected. With many third-party shipping insurance policies, you only need to prove that your goods were lost or damaged for your claim to be accepted.
With insurance provided by carriers, their liability is narrower. You would need to prove that your carrier was at fault for the items getting lost or damaged, or they cannot be held liable. That means that you are not covered in some of the most common causes of loss – like natural disasters or shipwrecks.
Finally, private insurance providers strive to make filing and processing claims as simple as possible. Their business model depends on expediently processing insurance claims so that both you, as the sender, and your customer can continue with business as usual. Carriers generally do not have such an impetus, which can severely complicate the claims process.
Let us sum up the differences between third-party insurance and the insurance provided by carriers:
Third-party | Carrier |
Special discounted rates | Standard rates |
Higher max coverage | Lower max coverage |
More types of items covered | Limited scope of items covered |
Prove that items were damaged or lost | Prove carrier liability |
Simpler claims process | Extended claims process |
Finally, we should discuss if third-party insurance is always necessary, even with the listed benefits. And the answer is – no. It is highly advisable to get private insurance in case your business regularly sends luxury items. On the other hand, if your shipments are never over $100 in value, there is no reason not to utilize the free carrier liability that is provided.
UNIVAL Logistics provides end-to-end logistics solutions and specializes in insuring high-value items. You can insure your packages for up to $150,000 and $100,000 for domestic and international shipments, respectively.
We offer industry-specific policies at premium rates and will insure anything from collectible coins to expensive electronics. On top of that, we provide real-time tracking of your shipments and you can integrate your business’ functionalities with our API for easier management.
Contact us to get your insurance quote and see how we ease the burden of transport.
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.105 per ton-mile. Reducing truck transport and opting for the optimal rail transload facility can help increase expense savings through rail.</p> <h2>Rail Freight and Intermodal Strategy</h2> <p>Intermodal is the use of two or more freight transporting modes. When combining rail and road, trains are utilized for the long-haul chunk of the transport. Trucks are used to ship loads from the origin to the terminal and then from the terminal to the recipient, known as drayage.</p> <p><strong>Using rail freight as part of an intermodal strategy has many benefits</strong>, which you can discover below.</p> <h2>Rail Freight Is Eco-Friendly</h2> <p>Given the current state of our environment, caring for it is imperative. From an ecological point of view, rail freight is a great transport alternative compared to air, sea, and road freight. <strong>The biggest advantage of rail freight is the reduction of CO2 emissions</strong>. Compared to other transport modes, rail freight leaves the smallest carbon footprint.</p> <p>For example, air freight consumes 138 tons of CO2, and the combination of air and sea consumes approximately 76 tons of CO2. However, rail freight consumes only 5 tons of CO2 over the same distance. That’s why, now more than ever, rail freight deserves more attention.</p> <h2>Rail Transportation Is Safe and Efficient</h2> <p>Railway safety has notably improved over the past couple of decades. Now, <strong>rail transportation is one of the safest shipping options</strong>. With steady investments in railway infrastructure, routings, tracks, terminals, and border crossing stations, there’s a significant enhancement in the performance of rail freight.</p> <p>Moreover, GPS tracking in trains prevents theft and losses, protecting the goods in transit. Since carriers can locate their customers’ shipments and follow up on milestones, they can deliver information on container position and detect if something unexpected happens during the transportation.</p> <h2>Rail Freight Is Fast and Reliable</h2> <p><strong>Rail freight is a fast and reliable shipping mode</strong> with shorter lead times when compared to sea freight. Although not always possible, there are many situations when rail freight is a more optimal choice than other transport modes.</p> <p>For instance, one of the biggest challenges for companies with production in China is the long lead times to northern Europe when shipping by sea. Sea shipping from China to that part of Europe typically takes around seven weeks.</p> <p>With rail freight, the shipping times can be cut in half, significantly reducing the lead time. Shorter lead times can make it easier to predict business operations and costs, positively impacting capital binding.</p> <p>In addition, rail freight transport is a <strong>punctual mode of transport</strong>. Compared to sea and road freight which can be subjected to bad weather and congestion, not much can hinder the rail path, reducing the risk of unexpected delays.</p> <h2>Are There any Drawbacks of Rail Transportation?</h2> <p>Intermodal containers experience a lot of movement during transit that can damage their contents. There’s a risk of a denied claim if cargo isn't appropriately blocked and braced by rail standards.</p> <h2>Rail Freight Shipping Can Be Your Optimal Choice</h2> <p>Rail shipping has many benefits and very few drawbacks. Apart from being extremely reliable, rail freight is also cost-effective. On top of that, it leaves the smallest carbon footprint compared to other shipping modes.</p> <p>With rising challenges in sustaining our environment, it’s vital to do everything we can to reduce CO2 emissions and reduce the impact of global warming. For those reasons, using rail freight as a part of intermodal strategy can be an optimal choice for many companies that wish to see improvement in our environment.</p> <p><a href="https://unival-logistics.com/">Unival Logistics</a> provides end-to-end logistic solutions and we always choose optimal routes, so that your packages arrive on time and cause the least amount of pollution. You can also take out <a href="https://unival-logistics.com/package-insurance">full-value insurance for high-value goods</a>, track your packages in real-time, and integrate your business with Unival’s API.</p> <p>If you need a logistics partner that combines traditionally effective methods of transport with modern solutions, contact Unival Logistics.</p>
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