All Risks

“All Risks” insurance is a contract that provides coverage for physical loss or damage to goods, except for the perils specifically excluded in the policy. This makes it a broader and more comprehensive form of insurance compared to other policies. Rather than enumerating the risks it covers, it only outlines what is not covered, ensuring that any risk not on the exclusion list is automatically protected.

This type of policy is particularly useful in freight forwarding, where goods are constantly exposed to a variety of potential hazards, from damage during loading and unloading to weather-related incidents during ocean or air freight. Freight forwarders benefit from the peace of mind knowing that their cargo is protected against the most unforeseen events.

How Does All Risks Insurance Work?

The key difference between All Risks insurance and other types of coverage lies in its scope. With a named perils policy, the risks covered are explicitly listed, and anything not on the list is not covered. This means that if damage occurs due to an unlisted event, the insurer is not liable for the loss.

In contrast, an All-Risks policy covers everything except what is specifically excluded. This means that the policyholder doesn't need to worry about missing any potential hazards, if the peril isn’t mentioned in the exclusions. For freight forwarders, this simplifies the process of insuring cargo, as it is less needed to comb through lengthy lists of covered risks. The assurance of automatic coverage for unlisted risks makes All Risks insurance an ideal option for high-value shipments or goods exposed to multiple risks.

Common Exclusions in All risks Insurance

While All Risks insurance offers broad protection, there are still certain exclusions that freight forwarders should be aware of. These exclusions are standard across most policies and include high-risk events or situations that require separate, specialized coverage. Some of the most common exclusions include:

• War and terrorism: Damages caused by acts of war, political unrest, or terrorist activities are typically excluded due to their unpredictable and catastrophic nature.

• Earthquake and natural disasters: While some natural disasters can be covered through additional endorsements, earthquakes, floods, and hurricanes are often excluded from basic All Risks policies.

• Wear and tear: Goods that degrade over time or experience damage due to normal use are not covered. All Risks insurance focuses on sudden and accidental loss or damage.

• Government seizure: If cargo is confiscated or destroyed by government authorities, this is not covered under a standard All Risks policy.

• Pollution or contamination: Damage caused by environmental factors such as pollution, chemical spills, or contamination is excluded unless additional coverage is purchased.

• Infestation: Damage from pests or vermin is typically not covered, as these risks are considered preventable with proper precautions.

• Nuclear hazards: Damage due to nuclear accidents or radioactive contamination is excluded from most All Risks policies.

These exclusions highlight the importance of reviewing an All Risks policy carefully before purchase. Freight forwarders should assess their cargo's specific needs and any additional risks it may face during transit to determine if supplemental coverage is required.

Riders and Floaters: Extending Coverage

While All Risks insurance provides extensive protection, freight forwarders can further customize their coverage by purchasing riders or floaters. These are additional provisions that extend the policy to cover specific excluded risks. For example, a rider can be added to cover earthquakes or floods, which are typically excluded from standard coverage.

This flexibility allows freight forwarders to tailor their insurance policies to the unique needs of each shipment. High-value cargo, perishable goods, or items being transported through areas prone to natural disasters may require extra protection. By adding riders, freight forwarders ensure that their cargo is safeguarded against a broader range of potential risks.

Why All risks Insurance is Essential for Freight Forwarders

For freight forwarders, protecting cargo during transit is a top priority. All Risks insurance offers several advantages that make it an essential tool for managing risk in freight forwarding:

• Comprehensive coverage: Unlike named perils policies, All Risks insurance automatically covers any risk not specifically excluded, providing freight forwarders with wide-ranging protection against unexpected losses.

• Peace of mind: Knowing that most potential risks are covered without having to check an exhaustive list of perils allows freight forwarders to focus on their operations, knowing their cargo is well protected.

• Adaptability: With the option to add riders, All Risks insurance policies can be customized to cover specific risks that may arise during transit, offering enhanced protection for high-value or specialized shipments.

• Cost-effective: Although All Risks insurance may have a higher premium than other types of policies, its broad coverage can save freight forwarders significant amounts of money in the event of a claim. The cost of an uncovered loss can far exceed the initial premium.

Conclusion

In freight forwarding, All Risks insurance is one of the most comprehensive forms of coverage available, offering protection against nearly all types of physical loss or damage to cargo. By covering all perils except those specifically excluded, it provides freight forwarders with an unmatched level of confidence in the safety of their goods. While there are standard exclusions, the option to add riders ensures that coverage can be tailored to meet the unique needs of any shipment.

To safeguard your freight forwarding operations with comprehensive All Risks insurance, contact Shipthis today. Shipthis helps you navigate policy options and find the best coverage for your cargo, ensuring it arrives safely and securely, no matter the destination.