ATA Carnet Cargo Insurance – Risk Protection for Temporary Imports

ATA Carnet use is growing internationally and for good reason. More and more logistics service providers and shippers are coming to understand the benefits of the carnet. Temporary importation shipments carry unique risks and challenges. Foreign countries have their own documentation requirements to clear customs and related security requirements, and they often require these documents in their native languages and their local currencies. The ATA Carnet document provides a quick and cost-effective solution for overcoming these obstacles and enables the shipment to cross through multiple customs jurisdictions without needing to pay duties or post multiple security types.

A related tool, and one that many shippers and forwarders don’t fully understand, is ATA Carnet Cargo Insurance. The goods on an ATA Carnet are typically delivered, unpacked, used or displayed, sometimes for quite a long time, and finally repacked and shipped to the next location. Customary language in a cargo insurance policy excludes losses that occur out of transit, when the goods are not packed and stowed, or when the goods are on display.

A sample loss from a 2016 carnet shipment illustrates the multilayered benefits of ATA Carnet cargo insurance.

The Scenario

A media company moved recording equipment on an ATA Carnet from Los Angeles to Canada. Nearly $200,000 worth of camera equipment was stolen from the filming location during set up for a shoot in Toronto. The shipper’s agents reported the crime to the local police and alerted Canadian customs. They made the trip back to Los Angeles and were able to use their ATA Carnet to make a successful partial re-importation of their remaining goods.

The Claim

In addition to the lost value of the stolen cameras, the shipper received a claim from Canadian customs requiring taxes to be paid on the stolen goods.  As far as customs was concerned, the stolen camera equipment had entered Canadian commerce and so a consumption entry had to be made.

The Cost

“Standard” cargo insurance:			ATA Carnet cargo insurance:
Lost Cargo Value	$200,000		Lost Cargo Value	$200,000
Tax Rate	15%		Tax Rate	15%
Tax Amount	$30,000		Tax Amount	$30,000
Total Loss Amount	$230,000		Total Loss Amount	$0.00

 

In this instance the shipper acted responsibly. They made the transit on an ATA Carnet, filed the police report with local authorities, and re-imported their remaining equipment appropriately. But the typical cargo insurance does not respond to either the loss of the goods or to the taxes owed in this instance because of the nature of the loss.

The Benefits

ATA Carnet Cargo Insurance provides a mechanism to recover both the cost of the goods and the payment of duties and taxes in the instance of theft on a carnet. Features of the ATA Carnet cargo insurance policy include*:

✓ “All Risk” coverage for new and used goods
✓ Coverage for transit to and from foreign ATA Carnet member countries
✓ Coverage continues while the merchandise is in these countries
✓ Provides duty reimbursement in the event goods are lost or stolen
✓ Covers goods checked as luggage or hand-carried on a commercial airline

*Subject always to policy terms and conditions

It is always recommended that ATA Carnet Cargo Insurance be procured along with the carnet document as a best practice.