Cargo insuranceHave you ever thought about cargo insurance when shipping – why does one need it?

International transportation agreements are based on international agreements (CMR Convention, Hamburg Rules of 1978, etc.) These agreements set the liabilities of the logistics companies.

According to the agreements the shipping companies get a limited free insurance. Of course nobody forces the insurance on you, but be sure to always ask what is the liability of the transporter.

  • for land transportation the liability is 8.33 SDR/gross kg
  • for air transportation 17 SDR/gross kg
  • for sea transportation 2 SDR/gross kg

SDR is an international currency unit. The rates can be checked HERE.

Example 1:

You want to send a washing machine to Germany with land transport. The washing machine weighs 65 kg and is worth £300.

The cargo gets damaged and is unusable.

Currently the rate of 1 SDR to English pound is 1.03.

Calculation: 65 kg x 8.33 SDR x 1.03 = £557.69
This is higher than the value of the washing machine, so it doesn’t make sense to buy an extra cargo insurance.

Example 2:

You are sending 20 laptops to UK with land transport. One laptop is worth £500, altogether £10 000. They weigh 51.4 kg.

The laptops have got damaged during the transportation and are unusable.

Calculation: 51.4 x 8.33 x 1.03 = £441
The sum is much smaller than the value of the laptops. In this case, you should buy a cargo insurance.

You should always make this kind of a calculation to determine whether you need cargo insurance or not.

If you have any further questions, do not hesitate to contact us!