Why shipment insurance is essential for businesses in the Philippines

Whether domestically or internationally, shipping goods involves a complex network of logistics and handling processes. Throughout this journey, shipments face potential risks such as damage, loss, theft, and delays, which can disrupt operations and impact your bottom line.

However, shipment insurance offers a crucial safety net, providing financial protection and peace of mind for businesses of all sizes. In this blog post, we’ll explore the risks involved in shipping goods and how insurance can protect your business financially.

Understanding the risks of shipping

While shipping services strive for efficiency and reliability, unexpected events can occur. If you ship goods overseas or domestically, you need to be aware of the following risks to proactively protect your products and minimize potential financial losses.

1. Damage

Goods can be damaged during transit because of rough handling during loading and unloading, accidents during transportation, and natural disasters. Additionally, because the Philippines is located in a typhoon-prone region, shipments are particularly susceptible to weather-related damage.

In 2022 alone, the country experienced 18 tropical cyclone events, many of which were tropical depressions, causing widespread disruptions and damage. Aside from typhoons, the Philippines is also prone to earthquakes, ranging in magnitude from two to seven, which can further jeopardize the safety of goods in transit¹.

2. Loss

Shipments can also get lost due to misplacement, logistical errors, or even theft. In some cases, parcels may be mishandled or misplaced within sorting hubs, leading to shipping risks, delays, or complete loss.

A recent example is the case of numerous Shopee customers who reported missing parcels, with some allegedly lost in sorting hubs, highlighting the vulnerability of shipments to misplacement and logistical challenges².

3. Theft

Theft is another significant risk, especially for high-value goods. Shipments can be targeted by thieves during transit or while stored in warehouses. Businesses shipping expensive electronics, jewelry, or other valuable items are particularly vulnerable to theft.

4. Delays

Unexpected delays can also occur due to various reasons, such as customs clearance issues, port congestion, or unexpected events like natural disasters or political unrest. Similar to shipment issues like theft, damage, and loss, these delays can lead to financial losses. This is particularly applicable for time-sensitive goods like perishable items or businesses operating on tight deadlines.

The Benefits of shipment insurance

Shipment insurance offers numerous advantages for businesses of all sizes, providing a crucial safety net against the inherent delivery risks of goods and parcels. Some key benefits of shipment insurance include:

• Financial Protection: Shipment insurance provides coverage for the financial losses associated with damaged, lost, or stolen goods. So, in the event of an unexpected incident, you can recoup the value of your goods and prevent a significant financial setback.
• Peace of Mind: Knowing that your shipments are insured allows you to focus on core business operations without worrying about potential shipping risks. Remember, this assurance can be invaluable, mainly when you frequently ship high-value or time-sensitive goods.
• Business Continuity: Freight insurance helps businesses maintain smooth operations even in the face of unexpected events. By covering the financial losses associated with shipping disruptions, insurance enables you to recover quickly and avoid costly downtime.
• Customer Satisfaction: Insured shipments can also lead to improved customer satisfaction. In the event of a shipping issue, insurance facilitates faster resolution and reduces disruptions for customers, enhancing their overall experience and fostering loyalty.

What does shipment insurance cover?

Shipment insurance policies vary in terms of coverage, inclusions, and exclusions, and here are the most common types you may encounter:

• All-Risk: This comprehensive coverage offers the broadest protection, covering a wide range of risks, including damage, loss, and theft, subject to certain exclusions.
• Named Perils: This type of coverage specifically lists the perils that are insured against, such as fire, lightning, or natural disasters.
• General Average: This applies to maritime shipments where cargo is sacrificed to save the vessel or other cargo. The loss is then shared among all parties involved in the voyage.

It’s also worth noting that lost shipment insurance policies cover common risks such as damage, loss, and theft. Damage protection, for instance, allows you to file a claim for various factors, including rough handling, accidents, or natural disasters.

On the other hand, loss coverage protects against shipments that are lost due to misplacement or logistical errors. Meanwhile, theft coverage protects against the theft of goods during transit or while in storage. Also, certain policies may offer limited coverage for financial losses caused by unexpected shipping delays.

However, it's important to note that shipment insurance policies may exclude certain events or circumstances. For instance, some may not allow you to claim for damage or loss resulting from inadequate or improper packaging, damage caused by spoilage or natural deterioration, and losses caused by war, terrorism, or other political events.

As such, carefully review the terms and conditions to learn about the specific inclusions and exclusions before purchasing shipment insurance.

How to choose the right shipping insurance

If you want to get adequate protection for your goods while optimizing costs, you must learn how to choose the ideal shipping insurance. To make the best choice that meets your budget and requirements, consider these factors:

• Assess Your Needs: Businesses should carefully evaluate their shipping volume, the value of goods being shipped, and the types of risks they face. For instance, if you’re shipping fragile or high-value items internationally, you may require more comprehensive coverage than those shipping low-value goods domestically.
• Compare Policies: It's essential to compare different insurance policies and providers to find the best fit for your specific needs. While at it, consider factors such as coverage types, inclusions, exclusions, and claim processes.
• Consider the Cost: Shipping insurance costs vary based on factors like coverage, shipping distance, and the value of goods. Also, remember to obtain quotes from different providers and compare costs while ensuring the policy provides adequate protection for your shipments.

Secure your shipments, secure your success

If your company relies heavily on international or local shipping, shipment insurance is an essential investment. After all, it can protect your business against unexpected events such as damage, loss, theft, and delays, allowing you to ship with confidence and peace of mind.

So, take proactive steps to protect your valuable shipments and minimize potential financial losses. Create a business account with DHL Express today and explore our comprehensive shipping insurance options.