Cargo insurance underwriting factors

Cargo insurance underwriting factors are the factors that insurance companies consider when deciding whether or not to insure a cargo shipment and, if so, at what premium. These factors can be broadly divided into two categories:

• Cargo-related factors:
  • Type of cargo
  • Value of cargo
  • Packaging of cargo
  • Route of shipment
  • Perishability of cargo
  • Susceptibility of cargo to theft or damage
• Transit-related factors:
  • Mode of transportation
  • Duration of transit
  • Political and economic stability of countries involved
  • Weather conditions along the route
  • Security of ports and warehouses

In addition to these general factors, insurance companies may also consider other specific factors, such as the shipper’s claims history and the underwriter’s own experience with similar risks.

Here are some specific examples of how cargo insurance underwriting factors can affect the cost of a premium:

• Type of cargo: High-value or hazardous cargo, such as electronics, jewelry, and chemicals, will typically have higher premiums than lower-value or less hazardous cargo, such as clothing and food.
• Route of shipment: Shipments traveling through politically unstable or high-crime areas will typically have higher premiums than shipments traveling through more stable areas.
• Mode of transportation: Shipments transported by air or sea are typically more expensive to insure than shipments transported by land.
• Duration of transit: Shipments that are in transit for a longer period of time are typically more expensive to insure than shipments that are in transit for a shorter period of time.
• Shipper’s claims history: Shippers with a history of frequent claims will typically have higher premiums than shippers with a good claims history.

When underwriting a cargo insurance policy, insurance companies will weigh all of the relevant factors to determine the risk of the shipment and the appropriate premium.