Why purchase ocean cargo insurance?
Under the Carrier of Goods by Sea Act, ocean carriers are responsible for the seaworthiness of the vessel, properly manning the vessel, and making the vessel safe for carriage of the cargo. However, The ocean carrier is not responsible for negligence of the master in navigating the vessel, fires, dangers, and accidents of the sea, acts of God, acts of war, seizures, strikes, riots, inherent defect, insufficiency of packing, quarantine restrictions and any other causes arising without the actual fault of the ocean carrier. Without ocean cargo insurance, even when a carrier can be proven legally responsible, responsibility is limited to $500 per “package” on ocean shipments and $20 per kilogram on air shipments. Other reasons are that companies may be responsible for purchasing ocean cargo insurance. For example, a company selling goods to a buyer overseas based on CIF terms (Invoice Cost, Insurance plus Freight) that company must pay for international transport plus shipping insurance.
