Why is it necessary to insure your goods during their freight from or to Vietnam? How to obtain this insurance? Many other questions will find an answer by reading this page. We will cover all the freight insurance theme. During this reading, we will detail you how to insure your shipment, the price that it may cost, and how to proceed a refund claim in case of any misfortune.
- 2.1) Ask a transfer under the CIF (Cost, Insurance and Freight) incoterm
- 2.2) Ask your forwarder to buy you a freight insurance
The cargo insurance is covering all losses or material damage that occurred on your shipment during its air, sea or ground freight. Many importers and exporters are thinking that this aspect is handled by the carrier, which is a very common mistake. Furthermore, if you are not handling yourself the insurance, it will be difficult to know if the right insurance and value of your goods have been chosen.
Companies are not realising how common are the damages occurred during the freight. On the factory floor, at the airport or port of departure/arrival, shipments aren’t spared. When such events are occurring, the transport insurance is the only thing that will allow your enterprise to stay above. No compensations can be asked without an insurance.
Partial or total loss can be caused by:
- Inappropriate loading/unloading or handling during the transport
- Vehicle accidents, like vessel sinking, a plane crash, a burning, or any other type of catastrophy
- Rain or sea water exposition
- Temperature variations
You cannot handle all those risks by yourself, because during the travel, you’re giving the responsibility of your shipment to the carrier, the forwarder and the supplier. In times of problems, you can’t question them.
There are numerous methods to insure your cargo. We’re detailing the two most common methods in the next paragraphs.
By definition, when you’re buying a CIF transfer (which is including the freight of your goods from your supplier’s factory to the port of loading), your shipment is automatically insured. If you’re choosing any other incoterm, you must communicate with your supplier and your freight forwarder to insure your goods, depending on the freight contract chosen.
Of course, you must ask a copy of the insurance contract to the carrier or the forwarder.
Passing through a forwarder for the insurance of your freight is a guarantee of transparency and control. First, you can ask for an optimal coverage of your goods during the transport in Vietnam, the loading and unloading operations and also during the main transportions (vessel, plane, train, truck…).
Your insurance will reimburse the value of your goods for all total or partial loss caused by:
- A sea, air or ground danger
- Mother nature (Extreme weather conditions, natural catastrophes…)
- An accident during the transport
- Inappropriate handlings
- Act of carelessness or malice
- Theft or destruction because of a human factor
The price of your insurance is based on the total value of your freight and shipment. The insurance cost is calculated by applying a ratio to the previous base value. This price is brought by the insurance company.
The calculation method is as follow: (freight value + goods’ value) * 2-3% = cost of your insurance.
The percentage is depending on your products’ type.
If you’re regularly ordering Vietnamese supplies, the probability is high that you will have to do a refund claim at least once. Good news, it’s generally easy to do it and it is usually accepted by the insurance company. Furthermore, you will be quickly compensated.
To obtain a refund, you must be able to prove that the deterioration of your goods occurred when the carrier oversaw them, which means that he is responsible of the damages. The first thing to do is to ensure yourself that there is no harm linked with the transportation when you’re receiving your goods. If there is the least damage, you must quickly declare it to your forwarder, which means ideally in less than 48 hours. To prove it, you must provide:
Videos and pictures of the decanting of the container and of the opening of the cartons. It will prove that you’re not liable to the damage occurred on your products
- A list of the damaged products, the quantity and value of each loss
- A proof of the value like the pro forma and commercial invoice
- A proof of the reception of the goods
Depending on the damaged quantity, you will be compensated partially or for the total of your loss. You will probably obtain a refund in the form of a money transfer directly sent on your bank account. Generally, the transfer is done within three weeks after the approval of your request.
Contrariwise, the process may be longer if you’re letting your supplier manage your freight, because he may be unused to handle compensation demands. In numerous cases, the supplier is asking the client to handle it by himself.
FNM Note: FNM Vietnam will handle the claim, which means that you will not have to handle it yourself with the insurance company
The insurance is only covering damages that are inflicted during the transport. Even if it sounds natural for most of you, it’s important to highlight that the insurance will never cover quality or any other issues caused by your supplier.
Also, the insurance isn’t covering the cost of your freight. You will only be compensated for the loss of your goods (FOB price). Which means that the money invested in the transport will be lost.
The simplest way to avoid the described situation is to prevent all damages that may occur. The insurance is very important, but the protection of your goods with a high-quality packing is even more. If you don’t fully trust your supplier, detail him your packing and conditioning requirements. Of course, ensure yourself that they are respected.
What is a high-quality packing? First, it will always depend on your products. But generally, these few rules are applying:
- Inner carton : 5 layers
- Outer carton : 5 layers
- Plastic wrapping of the outside of your cartons
It takes even more sense if, like many other importers, your goods are directly sent to an Amazon warehouse, without any product verifications before the distribution.
FNM Vietnam can insure your freight. For many, the freight insurance seems useless. Even we’re always doing the most so your goods are delivered in a perfect state, covering them with an insurance against loss or damage is always recommended. This without regarding if you’re choosing FOB or CIF. The contract is protecting your cargo against all risks, material loss or damaged caused by any factors no matter if it is a local or international freight.
FAQ | Freight Insurance from / to Vietnam
📜 Why have cargo insurance?
When you pay for cargo insurance, you avoid the risk of loss or damage to your goods when you ship them because insurance is there to cover everything. You should also be careful as the insurance is not usually paid for by the carrier.
📝 What are the methods to insure his cargo?
There are several methods to protect your cargo with insurance. You can request a transfer under the CIF incoterm or ask your forwarder to buy you a freight insurance. Find more information in the article of FNM Vietnam.
💥 What can cargo insurance cover?
A cargo insurance allows you to be reimbursed in case of problems during the journey if the problem is caused by sea, air or ground danger, if there has been a natural disaster, accident, improper handling or theft.
💸 How much does cargo insurance cost?
In order to get the price of a cargo insurance, you have to apply a ratio to the total value of your freight as well as your shipment, and this ratio will depend on your type of product. Find the corresponding formula in the article of FNM Vietnam.
💵 Are the reimbursements total?
The coverage of the cargo insurance depends on the quantities damaged and can therefore be partial or total. Usually you will receive your money after 3 weeks directly into your bank account.
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