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In the event of a total loss on an underinsured shipment, different policies may respond with different payment amounts, but the cargo owner will not be made whole. ![]() In a cargo policy, coinsurance comes into play when a shipment is underinsured.įor underinsured shipments, in a partial loss, the insurance company will only pay the proportion of the value that has been insured. In a policy with twenty percent coinsurance, the insurance company will pay eighty percent of the loss, and the insured will pay the remaining twenty percent. Coinsurance is the amount in claim that the cargo owner has chosen not to insure – this amount is essentially covered by the cargo owner after the deductible has been paid and before the insurance company pays.Ĭoinsurance is typically expressed as a percentage. You may be familiar with the term Coinsurance from medical coverage where it is quite common. Selecting an amount that is less than the value of the goods, or underinsuring the shipment, can have dire financial consequences. It is important that the correct insured value is selected when insuring your cargo. It is important to review the terms of your insurance policy, specifically the valuation clause, to be certain of how the policy expects the goods to be valued. ![]() The cargo insurance premium on a single shipment is typically calculated as the insured value times the policy rate.Īnd what is insured value? The simplest method to calculate insured value is to add the commercial invoice value of the goods to the cost of freight and add ten percent to cover additional expense. Not surprisingly, one of the most common questions we get is: what is the cost of cargo insurance? The calculation isn’t difficult, but you do need to get your valuation right on the goods being insured.
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