Non-Insurance: The Big Risk
Susan, Jonathan, and Paul are owners of very successful companies. They are importers of finished products as well as raw materials. They do assembly of their products within the US and distribution. Each has a different story about insurance and the pitfalls of being underinsured.
Susan’s Story: Cargo Insurance in a Time of Terrorism
Susan, an owner of a screw machine part business has seen her company ebb and flow through the 70’s, 80’s 90’s importing parts from Switzerland by air, doing finished work domestically and shipping the finished products both locally and nationwide to select businesses. On 9/11, three boxes of her product were on the American Airlines Flight that crashed into the World Trade Center. Her freight was lost. While everyone was grieving over the tragedy, she wondered whether the airline was going to cover her loss of $45,000.00. The answer was NO. She had not purchased ALL RISK CARGO MARINE INSURANCE. In fact, she had never purchased it, either for air shipments from Switzerland, ocean shipments from China, or domestic trucking all over the country.
She mistakenly thought that the carrier would come through and pay to recover what was lost. They paid her a paltry $850.00 per carton based on the weight of each box. She tried to sue, her attorney laughed at her and said she did not do her due diligence; insurance would have paid more for her claim.
The Story of Jonathan: Cargo Insurance for Natural Disasters
Jonathan, an owner of a furniture import company has a lovely showroom and specialized in modular furniture that was easy to move around into different groupings. It was manufactured in the Philippines and he imported all of it by 40′ high cube containers. None of it was insured. He had two containers loaded on a vessel which left port two hours prior to a typhoon. The typhoon changed direction and in order to save the ship, the entire top tier of containers was let loose. His two containers were lost at sea. He lost $125,000.00 in cargo.
The steamship company did not reimburse him for his loss. The steamship line declared a General Average and sent him a bill for the average loss of the top tier of containers as well as maintenance of the ship to get it to the next port safely. He had to pay $6,000.00 in additional fees to the steamship line. He contacted his attorney and after study the attorney found that he had to not only pay for the damages but had no case. He should have had ALL RISK CARGO MARINE INSURANCE.
Paul’s Story: Cargo Insurance for Damage and Theft
Paul, an entrepreneur is always trying the newest import from China. He is a risk taker. Imports new fads, new tech designs and hopes for the best. He imports both air and ocean from China, never worrying about insurance and when the cargo gets here, he arranges for local kids to go pick it up from the container freight stations because “they work cheap.”
His last shipment from China was shipped via ocean freight. It was four pallets and over $35,000.00 worth of speakers. The shipment cleared through US Customs while he was out of town. When he returned, he saw his four pallets on his warehouse floor, broken open, cartons re-taped and when he did a full count, he was missing over half of his product. In its place was newspaper. He began an investigation and through detective work discovered that the loss probably occurred at the warehouse locally or by the kids he had pick up the freight. He could not prove anything. Upon further investigation, his cargo was wet and over half of the remaining product was damaged and unsellable. He had no insurance.
THE MORAL OF THESE STORIES? DON’T LEAVE LAND WITHOUT ALL-RISK CARGO MARINE INSURANCE
You wouldn’t drive a car without insurance.
You wouldn’t own a home or boat without insurance.
You carry life insurance.
You carry health insurance.
- You should insure your business and product while in transit to and from your business.
- When your cargo flies domestically, pay for the insurance, this includes FedEx and UPS.
- Insist on using trucking companies that carry insurance and demand to see that paperwork.
- Carry insurance for your product wherever it is.
Tansey & Riggs can provide this coverage for you.