Modern day insurance of physical cargo has evolved from 1853 when separate marine insurance contracts were developed in Italy and spread to northern Europe. In the late 1680s, a gentleman named Edward Lloyd opened a coffee house named Lloyd's Coffee House on Tower Street in London which became the meeting place for parties in the shipping industry wishing to insure cargoes and ships, and those willing to underwrite such ventures..
Lloyd’s became a popular haunt for ship owners, merchants, and ships' captains, and thereby a reliable source of the latest shipping news and the premium charged was intuitive and was based on estimates of the variable risk from seasons and pirates.
Over this history, the insurance of cargo was generally described as marine cargo insurance although in today’s practice the term transit insurance would be more appropriate.
The insuring of cargo is today not limited to lengthy sea voyages where the ownership of the cargo changes hands and fortunes multiple times along the way. These include mitigating or eliminating the risks of loss and or damage to cargo caused in the transits via the ocean and by air, truck, rail or other conveyance;
- In transit from your supplier to you or your customer at your warehouse
- In transit from you to your customer within the same country (Inland Transit risks)
- In transit between one of your warehouse or place of storage to another of your warehouse or place of storage
- In transit from you to your customer in another country
- In transit inland from the vessel’s discharge port to an inland destination.
Today, a proper cargo transit policy should be crafted in such a way that it responds, to the best extent possible, in the insuring of the cargo from the time you assume financial exposure and insurable interest in the cargo to such time these exposures are extinguished and passed on to your buyer.
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