Normally cargo is moved using three modes of transportation, road, sea, or air depending on the cost, urgency, and destination. The cargo on the ship is exposed to risks arising from the act of God, or enemy, or fire, etc. Because collection for loss and damage from third party carriers and service providers is unlikely, it is prudent for importers and exporters to arrange cargo insurance to cover their commercial interests. The primary purpose of cargo shipping insurance is to redistribute loss and so to eliminate risk. Cargo insurance, or so-called marine insurance, can cover all modes of transportation. Cargo insurance typically compensates the owner for losses in excess of those which can be legally recovered from the carrier that are sustained from fire, shipwreck, piracy, and various other causes. Insurance is affected either by exporters or buyers, depending upon their contract of sale of goods. An international trader may obtain cargo insurance either directly from an insurance company or through the carrier, freight forwarder, or logistics firm handling the shipment.
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