Exporters Lose Rp 8 Billion Due to Wrong Policies! Here’s How to Avoid It

In the world of exports and imports, even small mistakes can have fatal consequences. One of the most common is choosing the wrong insurance policy.cargo(cargo insurance). Many novice exporters don’t realize that a single mistake in selecting a policy type can lead to significant losses, even reaching billions of rupiah. This error is often related to a lack of understanding of shipping risks and marine cargo insurance clauses.

A real case shows how an exporter suffered losses of up to IDR 8 billion due to choosing the wrong insurance policy.cargo. A high-value shipment was damaged in transit, but it turned out not to be covered by the policy purchased. From this, we learn the importance of understanding the details of insurance coverage before shipping. As an export business, you certainly don’t want a similar situation to happen to your company. Therefore, understanding the role of an insurance broker is key to avoiding significant financial risks due to administrative errors or choosing the wrong policy.

And because every shipment of high-value goods always carries a big risk, before you make your next shipment, Contact L&G Insurance Broker now at 08118507773 for free consultation before any risk occurs. With extensive experience as a professional cargo insurance broker, L&G will help you find the coverage that best suits your export business needs.

Common Mistakes Exporters Make in Choosing a Cargo Policy Type

Many exporters, especially those new to international trade, assume that all marine cargo insurance policies are the same. However, each policy offers different coverage depending on the type of goods, shipping route, and mode of transportation used. Understanding these differences is the first step in effective logistics risk management.

a. Not Understanding Cover Types (ICC A vs ICC C)

This is the most common and fatal mistake. Many exporters purchase policies with Institute Cargo Clauses (C) because the premiums are cheaper, even though the coverage is very limited. ICC C only covers major casualties, such as ship sinking or fire. For high-value goods like industrial machinery, heavy equipment, or electronics, Institute Cargo Clauses (A) should be used, which cover almost all risks.

b. Not Including the Appropriate Insurance Value (Underinsurance)

Some exporters insure goods at a lower value than their actual value. The ideal insurance value should include the CIF (Cost, Insurance, and Freight) value plus a 10% profit margin. As a result, when a claim is filed, the compensation does not cover the actual loss. This is called underinsurance and often leads to partial claims being rejected, resulting in a disproportionate loss for the exporter.

c. Ignoring Additional Clauses

Many companies don’t include war, strike, riot, and civil commotion (WSRCC) or warehouse-to-warehouse clauses, even though risks can occur outside of sea travel, such as at ports, transit warehouses, or during loading. Without a warehouse-to-warehouse clause, goods are not protected while in the initial or final warehouse.

These mistakes may seem simple, but they can lead to significant, irreparable losses. Therefore, before signing any policy, it’s highly recommended to consult with a cargo insurance broker like L&G Insurance Broker, which has experience handling thousands of shipments worth billions of rupiah.

The Impact of Incorrectly Determining Incoterms

Besides selecting the wrong policy type, another common mistake is incorrectly specifying Incoterms (International Commercial Terms). Incoterms determine who is responsible for costs and risks during shipping. Mistakes in Incoterms can invalidate your right to file a cargo insurance claim.

Incoterms and Insurance Liability

• FOB (Free On Board): The risk passes to the buyer (importer) once the goods are loaded onto the ship. If an exporter purchases FOB cargo insurance, the policy may be considered invalid because the risk has already passed to the importer.
• CIF (Cost, Insurance, and Freight): The seller (exporter) is responsible for costs and insurance to the port of destination. In this case, the exporter is required to provide marine cargo insurance of at least ICC C.

A real-life example: an industrial machinery exporter used the FOB (Freight-to-Owner) system but thought they still had insurance coverage until the goods arrived at a Japanese port. When an incident occurred at sea, their claim was rejected because the policy didn’t cover the journey after the goods were loaded. The total loss reached IDR 8 billion. From this case, we learn the importance of understanding the relationship between Incoterms and cargo insurance policies. Any difference in terms can change your responsibilities and claim rights.

👉 Therefore, before signing an export contract, first discuss the details of your Incoterms withL&G Insurance Broker of08118507773Our team of experts will ensure your policy aligns with your contract and maximally protects your business interests.

The Crucial Role of Insurance Brokers in Avoiding Losses (Rp. 8 Billion)

The role of cargo insurance brokers is vital in preventing significant losses, such as the Rp8 billion case described above. Brokers act as an extension of exporters and importers in navigating the complexities of cargo insurance and logistical risks.

a. Calculating Accurate Insurance Value

A professional insurance broker will help you calculate your coverage, ensuring you’re not underinsured. L&G Insurance Broker has analytical tools that ensure your coverage is sufficient to cover actual losses in the event of a disaster.

b. Choosing a Trusted Insurance Company

Not all insurance companies have a good track record of paying marine cargo insurance claims. Insurance brokers recommend companies with strong solvency and a transparent claims process, which is crucial when facing billions of rupiah in losses.

c. Total Claim Assistance

When a loss occurs, insurance brokers act as advocates. They prepare claims reports, negotiate with loss adjusters and insurance companies, and ensure claims are paid in full and promptly. This is especially important for novice exporters with no experience in insurance litigation.

Important Checklist Before Buying a High-Value Cargo Police

For exporters who regularly ship goods worth billions of rupiah, having an accurate cargo insurance checklist is essential. This helps minimize the risks of shipping goods overseas.

• Make sure the insurance value includes the price of the goods, shipping costs, and profit margin.
• Choose All Risks coverage (ICC A) for sensitive and high-value goods, especially for exports to risky logistics routes.
• Check the mode of transportation used. Whether it’s by sea, air, or land. Each mode has different risks and policy provisions.
• Pay attention to packaging and how items are loaded. Insurance may reject claims if damage is caused by inadequate packaging.
• Check the warehouse-to-warehouse clause. This ensures that goods are protected from the moment they leave the shipper’s warehouse until they reach the recipient’s warehouse.
• Make sure you have a valid insurance certificate. This certificate serves as the legal basis for a claim in the event of an incident.

Without understanding the above, you risk missing out on full insurance coverage. Therefore, working with an experienced heavy equipment and cargo insurance broker is highly recommended to ensure every detail is covered.

L&G Case Study: Saving Exporters from the Risk of Claim Failure

The case of an exporter who lost Rp8 billion due to a wrong policy serves as a valuable lesson that logistics risk management should not be taken lightly. L&G Insurance Broker has rescued many exporters from similar situations.

In the case of an industrial machinery shipment to Europe, an L&G client suffered damage due to rough handling at the transit port. This damage was not covered by the standard ICC Clause C. Because the client had engaged L&G Insurance Broker from the outset, L&G recommended ICC Clause A with expanded handling risks. As a result, the damage claim was submitted and fully approved, safeguarding the exporter’s financial stability.

L&G Insurance Broker from South Tangerang is not just a policy provider, but a strategic partner that ensures your protection really works when you face the risk of cargo loss or damage in the middle of a global logistics journey.

Conclusion

In the export business, every decision can have a significant impact on business continuity. Choosing the wrong cargo insurance policy is not just an administrative matter but can result in losses of up to billions of rupiah. The case of an exporter who lost Rp 8 billion due to the wrong policy serves as a valuable lesson: understanding the details of coverage, Incoterms, and the insured amount is crucial in managing the risks of shipping goods abroad. Without this understanding, novice exporters are vulnerable to financial risks and rejected claims.

To ensure your shipment is fully protected, entrust the process to a professional insurance broker like L&G Insurance Broker. Brokers act as independent advisors, helping you select the best policy (ICC A) and ensuring clauses like warehouse-to-warehouse coverage are available. L&G not only assists with policy selection but also assists you through the claims process, ensuring your rights as an exporter or importer are fully met under the terms of marine cargo insurance.

Because any high-value shipment carries significant risks, proactive action is key to business sustainability. Don’t wait for risks to drain your capital. Secure your company’s assets and reputation now.

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DON’T WASTE YOUR TIME AND SECURE YOUR FINANCIAL AND BUSINESS WITH THE RIGHT INSURANCE.

HOTLINE L&G 24 JAM: 0811-8507-773(CALL – WHATSAPP – SMS)

Website: lngrisk.co.id

Email: halo@lngrisk.co.id

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