Packaging And Insurance Premium

By Author: Stuart Spindlow
Total Articles: 8
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The quality and especially the relevance of the choice of packaging may be part of the criteria taken into account by the insurance companies in fixing the amount of the insurance premium for goods in transit. This is all the more true as packaging is often part of the budgetary items on which professionals seek to save money to lower the cost of their transport services. There is no shame in admitting that this is a practice which is widely used since packaging cost does not add value to the product and is discarded as soon as it reaches destination. Business owners often ask production managers to minimize their packaging cost so that better GP is reflected. Failing to take adequate transit packaging may lead to various hazards.

With the risks this entails:

• Physical damage inflicted on the goods: crushing, dispersion, moisture, etc.
• Dispute with receiver, dissatisfied with condition of arrival of goods thus leading to no money back

Optimizing the protection of goods does not necessarily require turning to the most expensive or the most robust packaging solutions. The important ...
... thing is to find the one that will best suit the type of product and the mode of transport used. For example, marine packaging allows goods loaded in a boat to be better protected against:

1. The physical conditions peculiar to the holds of ships: heat, humidity, pressure
2. The harshness of maritime handling
3. Risks of flights in the port area

The requirements of the insurers in terms of packaging will be different if and only if the goods make the entirety of their journey in containers.

Consequences of Insufficient Packaging on Merchandise Insurance Coverage

The general conditions of most insurance policies specify that packaging that if there is proof of transit packaging is insufficient or unsuitable for the normal hazards of the journey then it is an exclusion factor for the insurer's guarantees, as well as faulty stowage( If the insured is responsible).

In this context, insurers can effectively refuse to pay for damages caused by these conditioning failures, provided they are found by a damage commissioner or by the expert present at their destination.

Finally, note that, according to the Incoterms, the responsibility for a suitable packaging rests with the seller, and on the other hand that the carriers can never be called in question for a problem of insufficiency or inadequacy of the packaging.