Why do you need a container insurance? Well, the container has been a revolutionary invention of the 21st century. “Containerisation” has been growing steadily in the last few decades. Containers reach every corner of the world with the help of vessels, trucks and trailers. With all these movements, the container is prone to a lot of risks. Ocean transportation can be unpredictable. Bad stowage, bad weather, improper supervision, and many other causes can lead to container damage.
Container damage can leave shippers in a financially tough spot. Container damage could be broken doors, dents, heat damage, dropped in the ocean and so on. There could be times when it is hard to find the origin of the damage to see who is responsible to compensate for the damage. Many shippers overlook container insurance as they want to save costs or don’t bother themselves about it. A freight forwarder without insurance might have to pay the entire value of the container and the cargo in case of a total loss. This is a huge financial disadvantage and inconvenience.
This is where Container Insurance provides security to equipment owners and users by covering a wide variety of risks. Oftentimes, it can be easily confused with Cargo Insurance. While Cargo Insurance protects the cargo inside, Container Insurance protects the equipment.
Different types of container insurances
There are many brokers in the market offering insurance to container owners, lessors and operators. Sometimes, Insurance brokers offer container- together with cargo insurance.
Container Insurance types can vary from insurance broker to insurance broker and the types of damages you would like to prevent. In general, most insurances cover the following aspects:
- Physical Loss and Total loss
- Recovery and Maintenance costs – Full Equipment Cover (FEC)
- Damage Repair and Lost units
- Third-Party Liability (ex. Chassis)
- Coverage on Residual Value on Equipment
Container Insurance might not cover certain conditions (and this can vary):
- Mysterious disappearances
- Mechanical/electrical breakdown
- Errors in design/manufacture
- Depreciation, inconsistent maintenance routine
When the containers are returned to the owner, it is inspected for damages. If damages are found, the owner makes a cost estimate for fixing the damages and sends it to the container user. The user arranges another inspection to recheck the charges and negotiates in case of disagreements. The charges are then settled using the Insurance brokers. When the insurance is not a part of the deal, the user faces the inconvenience of paying from his/her own pocket.
What we offer at xChange
Container xChange with the help of ATS Insurance offers Container insurance to customers. The container suppliers can choose to include insurance as part of container usage on every transaction they make or on a case-by-case basis but it is always paid by the user of the container.
At Container xChange, customers benefit from 2 types of container insurance.
The Basic Insurance covers the equipment from a total loss such as lost at sea, mysterious disappearances or damaged extensively that it cannot be fixed. The insurance is valid for one-way moves up to 60 days from the day of pick-up. The insurance automatically renews after the 60 days unless the box is reported as returned empty.
The Premium Insurance covers all kinds of physical damage a container can go through including a total loss and has a slightly higher price point. Physical damage could happen due to swaying of the vessel, mishandling by the crane lifters, heat damage, a train derailment and so on. The premium insurance covers any costs that go above the DPP. The insurance is valid for one-way moves up to 60 days from the day of pick-up. It gets renewed on a day-to-day basis unless the containers are reported as returned empty.
Apart from the insurances, there is also the Damage Protection Plan (DPP) that helps to compensate for the regular maintenance and repair after the container use. The DPP is paid by the container supplier. Any costs, that rise above the DPP is covered by the insurance. DPP is useful when you don’t want to make damage assessments every time the container is leased out. It takes care of all the repair costs if it falls under the negotiated DPP amount. The Basic Insurance for a 20DC costs $2.5 and the Premium Insurance costs $12, and the price varies according to size and type of the container as shown below