The cargo insurance premium on a single shipment is typically calculated as the insured value times the policy rate. And 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.
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.
It is important that the correct insured value is selected when insuring your cargo. Selecting an amount that is less than the value of the goods, or underinsuring the shipment, can have dire financial consequences. You may be familiar with the term Coinsurance from medical coverage where it is quite common. 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.
