Freight Insurance :
Freight is the rent or amount paid for the transportation of cargo. This insurance provides protection against the loss of freight. Generally, the ship-owner and the person receiving the freight is one person. The freight could be paid in advance or at the destination.
Under the marine law the freight is paid only if the cargo reaches safely at the destination port. Therefore, if the freight has been paid in advance, it poses no difficulty. There is a problem sometime when the freight is payable at the destination and the cargo may get lost during the voyage and does not reach its destination. In that event the freight is lost and the shipping company has to bear the cost. In order to overcome such contingency freight insurance is taken.
For example- The owner of goods is bound to pay freightage, under the terms of the contract, only when the goods are safely delivered at the port of destination. If the ship is lost on the way or the cargo is damaged or stolen, the shipping company loses the freight. Freight insurance is taken to guard against such risk.
