International shipping can berisky for companies that don't properly protect themselves againstsome of the precarious realities of international trade. Forinstance, piracy around the world more than doubled in the first 6months of 2009 compared with the same period a year earlier,according to the ICC International Maritime Bureau's PiracyReporting Centre. In addition, shipping accidents and inclementweather such as hurricanes and tropical storms can wreak havoc onbusinesses transporting goods from overseas.

To help you become more knowledgeable about how your clientscurrently attempt to protect their goods, here are 10 questions youshould ask to help you uncover coverage gaps and offer solutions toensure their businesses are adequately protected from the risks ofinternational trade:

1. Do your clients' current cargo insurance providersprotect their goods via all modes of transportation, includingship, airplane, train, and truck? A sound cargo insurancepolicy should offer complete protection along with consistent ratesand deductibles, regardless of the mode of transportation used tomove the goods. If the goods move from a ship to a truck fortransportation to their final destination, the policy rates andcoverage limits should not differ based on mode of transportation.The best policies do not expose a business to gaps in coverage asgoods move from one transportation mode to another.
2. Have your clients experienced any problems filingclaims for lost or damaged goods with their insurance provider,such as time delays or other hassles? Most providers offeronly a few days for clients to file claims, while others can offera window of 30 days for filing a claim.
3. Do your clients inspect all goods upon delivery, evenif the packaging appears to be unharmed? If the packagingof your clients' shipment appears unharmed when it arrives at itsdestination, but the goods inside are broken or damaged, yourclient will want an insurance plan that enables them to file aclaim once the damage is discovered, even if that is days or weeksdown the road. Some insurance providers give you only a few days todiscover the damage and file a claim, while other insurers offer upto 30 days to report damage from the time the shipment arrives atits destination.
4. Do your clients understand their fullexposure? There are many hidden risks when it comes totrading internationally. For example, goods may be on a ship thatencounters issues at sea and must jettison containers during thevoyage in order to return safely to port. Even if goods arrivesafely at their destination, your client may be liable for aportion of the loss or damage of other goods on the vessel, even ifthey are not your client's property. A top-notch cargo insuranceprovider should have expertise in the international movement ofgoods to offer full protection of your client's goods.
5. Do your clients buy insurance to protect their goodsfrom a general liability insurance provider or a cargo insuranceprovider that is experienced in supply chain management andtransportation? Cargo insurance providers should be ableto couple service with expertise in multiple modes oftransportation, customs brokerage, and moving goodsinternationally. Having this background knowledge and know-how iscritical to protecting fully your client's goods.
6. Do your clients know at what point they assumeownership of goods along the supply chain, as laid out in thepolicy? If not, they should consult the terms of salebetween them and their suppliers so they know exactly when theytake ownership of goods in transit, which has major implications oncargo insurance policies. Do your clients know if they assume therisk and responsibility for the goods at the leading point of theshipment, or if the risk and responsibility is still in theirsupplier's hands? Once you can identify the point at which yourclients take ownership of the goods, you can work with your clientsto make sure that their cargo insurance policies covers the goodsfrom that point forward.
7. Are your clients' goods covered while they are sittingin a warehouse and not in transit? It's common for goodsto come into the U.S. and sit in a freight forwarder's warehouse asthey wait for other goods to arrive before being consolidated andshipped to their final destination--which can take weeks. Ensurethe best policy for your clients by determining that any existingcoverage also covers their warehoused goods.
8. Are your clients covered if their trading partnersrefuse to honor their responsibility to pay for damagedgoods? Even if ownership terms are in place and the buyerhas taken ownership of in-transit goods per those terms, that buyermay still refuse to pay for goods damaged while in transit. Ofcourse, your clients should enforce their sales contracts, but thatcan sometimes be difficult to do, especially overseas, and can evenlead to considerable legal expenses. In this case, contingencycoverage in addition to a cargo insurance policy can help covershipments that your clients were not required to insure.
9. Do your clients know that cargo coverage is availableas an alternative to insuring their shipments one container at atime? If your clients are insuring shipments one containerat a time, consider an "open cargo insurance" policy type ofcoverage, which can save money by providing a comprehensiveinsurance policy to protect all of your clients' goods in transit.Based on the volume of shipments your clients typically handle andthe size of your clients' company, an open cargo insurance policymay make sense.
10. Are your clients' current insurance providers providingthe level of service and counsel that your clients need in order tothrive? So much of today's trade is in perpetual motion,moving around the world, into containers, onto ships, over theocean, through customs, across borders, into warehouses, ontotrains, into trucks, stored in warehouses, and so on. These are allthe ingredients that increase risk in international trade. Insurersthat offer free cargo risk assessments can help you and yourclients learn more about what kind of risks businesses face andunderstand the types of insurance that can protect against therisks associated with international trade.

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