What is a certificate of cargo insurance?
A document indicating the type and amount of insurance in force for a particular shipment. Used to assure the consignee that insurance is provided to cover loss or damage to goods in transit. In some cases, the shipper may issue a document certifying that the goods are insured under a given open policy, and this certificate represents and supersedes such an open policy, the provisions of which are governing. Since objecting to such an instrument does not constitute a "policy" within the scope of the credit requirements, it has become common practice to use a special marine policy. A special marine policy is indistinguishable from an open policy and exists independently as an obligation of the underwriting company. Also known as Certificate of Insurance and Special Cargo Policy.
The importance of managing cargo insurance certificates
Cargo insurance certificates are one of the most important documents in the shipping industry as they carry the greatest risks inherent in them. A cargo insurance certificate is a document that indicates the type and amount of insurance coverage that is valid for a given item. It is used to assure the consignee that insurance is provided to cover loss or damage to the goods in transit.
Certificates of insurance typically include the following information:
- Conditions of Insurance Coverage
- Transport information
- Additional/Special Coverage Conditions
- Instructions or Actions to Take in the Case of Loss or Damage of Goods
- Billing agent contact information
- Liability of Carrier, Trustee or Other Third Party
Mistake
Proper management of insurance documents is essential to understand the financial requirements of the shipping company and the consignee. Proper management of insurance documents can help detect errors on documents and help companies correct errors during shipping transactions.
Penalty or fine
Errors in insurance documentation may result in penalties and fines under the terms of the agreement. Effective management of insurance certificates helps avoid these consequences, making business transactions smoother.
