Learn about merchandise insurance

A service that seems to be complementary but that can help reduce the percentage of risk in all stages of a logistics process

FAQs

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Glosary

We help you understand the meaning of the most common keywords in our industry.

  • Accident: Grievous damages, destruction or important loss suffered by people or merchandise due to an accident. They are usually compensated by the insurers.

  • Additional Expenses: Any value different from the commercial invoice, freights and taxes.

  • Automatic Coverage: General cargo or previously authorized by the insurer.

  • Automatic Renewal: Act by which the insurance taker authorizes the insuring company to immediately renew the insurance, for the same period, when this has already expired.

  • Average: Synonym of accident.

  • Beneficiary: Natural or juristic person who receives the benefits or the insurance company payment.

  • BL: Contract of transportation given to the shipper as a document. It demonstrates the existence of a contract and gives rights over the merchandise.

  • Catastrophe: An unfortunate incident that happens unexpectedly and unintentionally, typically resulting in damage or injury of the insured.

  • Claim: Payment or compensation request after an accident has occurred.

  • Coinsurance: Legal practice when an insurer shares the risk assumed with other insurers.

  • Commodity: It’s the type of the insured cargo.

  • Compensation/Benefits: Amount to be payed or benefit to be given to the person who files a claim after an accident or loss has occurred.

  • Container: A very large metal box with the international standard measures, used for cargo transportation.

  • Coverage: Any risk or event covered by an insurance and for which a compensation is paid when they occur.

  • Deductible: The part of the risk that the insured is in charge of. Insurers use this mechanism to share the risk with the insured, encouraging them to be careful with their goods.

  • Dispatch: Consecutive number given to the insurances.

  • Exclusion: Specific condition indicated in the insurance policy as non-covered and for which the insurer doesn’t pay any compensation. All exclusions vary according to the type of insurance.

  • Extraordinary Cleaning: Necessary actions to remove the dirt from a container, left from damages produced to the cargo. E.g. oil, grease, chemical products.

  • Freight Forwarder: Moral person in charge of organizing, loading, unloading, driving, keeping and transporting domestic or international cargo in his facilities or his contributor’s, through different modes of transport.

  • General Average: Intentionally provoked damages to a vessel or the cargo being transported, in order to avoid grievous damages to the merchandise or the vessel. Its value is proportionally distributed between the beneficiaries of this intentional conduct.

  • General Cargo: All the cargo that can be handled without special requirements or specifications.

  • Incoterms: Set of international rules, governed by the International Chamber of Commerce, that determine where the responsibility starts and ends, from both seller and buyer.

  • Infrainsurance: The circumstance where the value of the insured goods is lower than its market value.

  • Insurable interest: The economic relationship threatened by a risk, where the wealth of the insured could be affected if it occurs. The insurable interest must exist in every moment, from the date in which the insurer assumes the risk.

  • Insured Value: Maximum amount of money for which, in case of an accident, the insurance carrier should respond.

  • Insured: Natural or juristic person, owner of the cargo, who can result affected by the risks covered by the policy.

  • Legally Authorized Company: Transportation company, legally established and endorsed by the authorities.

  • Limitation Period: The instant when the deadline for an action or right stablished in an insurance contract is reached.

  • Loss of profit: Any profits or benefits that a shipper doesn’t earn due to an accident.

  • Notice of accident: Document by which the insured informs the insurer the occurrence of an accident.

  • Particular Average: Damages produced to the cargo by accident.

  • Policy: Document given by a company to the insurance taker, where all the conditions of the contract are exposed.

  • Premium: The value of an insurance.

  • Rate: Percentage charged by the insurer for selling the policy. It varies according to the type of cargo and mode of transport.

  • Renewal: Act by which the taker decides to continue with his insurance for an extra period.

  • Risk: Uncertain event that does not depend on the will of the insured.

  • Security Protocol: Document that exposes the requirements an insured should take for inland transportation.

  • Special Cargo: All the cargo that needs special handling, such as perishable or refrigerated.

  • SSL:

  • Subrogation: is a term describing a legal right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured. This is done in order to recover the amount of the claim paid by the insurance carrier to the insured for the loss.

  • Suprainsurance: Understood as the excess of the insured amount against the market price of the insured goods.

  • Taker: The person who hires the insurance and who is obliged to pay the premium.

  • Validity: Amount of time before the insurance ceases to have effect.

  • Vehicle accompaniment: It’s the accompaniment of the shipment with a person, escort or custodian in a vehicle following the truck, under legal conditions and according to each country’s customs.

  • Vessel: It’s a big ship with a deck, specially designed for long hauls.

  • Warranty: The promise by which the insured is obliged to comply to a specific requirement or by which the existence of a fact is stated (e.g. an escort will be hired to diminish the risk).

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Resources

Here you can find additional information that will help you better understand merchandise insurance, the risks of cargo transport and the advantages of protecting goods in international trade.

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