What is a major purpose of cargo insurance?

Cargo insurance serves a critical function in international logistics by providing financial protection for goods while they are in transit. The primary purpose of this insurance is to ensure that goods are safeguarded against various risks, including loss, damage, or theft. This coverage is especially important in the complex and often unpredictable nature of global shipping, where goods may travel by multiple modes of transport and through various regions, each with its own set of risks.

While some options may touch upon aspects related to the logistics process, they do not encompass the overall intent of cargo insurance. For example, insurance is not limited to protecting against theft alone; it addresses a broader range of potential incidents that can occur during the shipment. Additionally, cargo insurance does not cover storage fees or guarantee timely delivery; rather, its focus is solely on the protection of the cargo itself. Understanding the comprehensive role of cargo insurance helps businesses manage risks effectively and maintain continuity in their supply chains.