I’ve been wanting to do some blogging aimed at entrepreneurs and since I couldn’t figure out where to start, I am starting with Pirate Insurance.
I have never really promoted my blog or written regularly on it because, well… content is time consuming and hard… but if I use stories instead, I’ve got a few…
More than few really….that range from the absurd, to the ludicrous to the pretty damn cool….so I figured since I am between businesses right now, what better time than this to put these stories into tangible form.
Today I’ll start with a simple one and it involves Pirates, that’s right. Pirates. Not the “DVD, DVD kind of pirate, but the Shiver Me Timbers kind… but with less parrot and more assault rifle.
Now here’s some info. Modern Pirates don’t look like this…
It was 2011 and I was selling a lot of brand licensed cell phone cases. Brands like Ed Hardy, Marvel, Lady Gaga etc.
I was always responsible for about 95% of everything my company sold and I love international clients because they wire cash in advance, so almost 60% of our revenue came from overseas… everywhere from Australia and South Africa to England and Mexico.
Lots of product going from our Hong Kong warehouse to all over…
One such shipment was going to this chain of stores in Mexico on an otherwise nondescript autumn day.
I remember I had just come back from China… bit jet lagged and about 4 cups of coffee short of functional and as I walked into the office, I had a cryptic note from our exclusive distributor from Mexico which I was immediately handed on a post-it.
Our shipment en route from Hong Kong to Mexico had disappeared, the post-it note claimed.
Well that’s odd.
So I called the company’s CEO, Alberto and he answered in his thick nearly unintelligible accent and simply said…
“Pirates disappeared cases, boat’s gone. Cases gone. Send more my friend?”
So I thought that I had misunderstood like the time he explained to us his warehouse was on fire, which it most certainly was not.
So I asked him again what happened.
As it turns out, sure enough the ship that our boats were on were hijacked by straight up PIRATES which the freight forwarder confirmed.
The whole SHIP was missing.
Pirates had stolen and later sold about 10,000 of my Ed Hardy Cases to who knows who.
I will just repeat that pirates stole like 10,000 Ed Hardy cases…
It was a good $50,000 order which I should have been bummed about, except for the fact that… there’s a rider for that… and I had bought it due to low cost and our distributor ordered another shipment that day so by the end of the week they actually spent double with us. Later I found out it was the La Familia Drug Cartel that swiped my inventory.
So word to the wise to anyone who is doing business anywhere.
Get good insurance. My freight insurance definitely did not cover piracy, but the extra liability insurance rider did.
So you need pirate insurance?
Probably not, but there’s a million points of risk you may not see coming.
Currency fluctuations can be insured against.
Wars can be insured against.
In fact in another post I discuss how I started New Years in 2011 with $1.3M burned up in 30 minutes.
Further, as a bonus, get Trade Credit Insurance if you’re dealing with big retailers that you do lots of business with.
I used Euler Hermes. This is not an affililate link. You can read more on their site, but I was aggressively expanding the company at that time, eventually into 23 countries and many of these companies were wild cards in terms of reliability.
Credit insurance gives you peace of mind (for a price they start at $25k a year) but they check out all your clients risk and should they default or even go bankrupt, Euler Hermes will do aggressive collections for 90 days and then pay you up to 80% of your losses. Not too shabby.
Even if you don’t have needs like this. Renting? Get a $10 a month renter’s insurance policy.
My SLR was misplaced by a less than bright friend in NYC and by misplaced I mean the dude left it on the roof of my car as I drove off.
My renter’s insurance replaced it for me after I told them exactly what had happened.
Once I left my window open and it rained which soaked my Technics turntable and they covered a new one.
The reason people think insurance is a rip-off is because they don’t use it to their benefit because they don’t even know what they have mainly due to lack of research.
Here’s a few cautionary stories:
On the flip side I have a good friend who switched insurance policies on his car which left 24 hours of uncovered and in that time a little patch of gravel flipped his new SUV and him down into a creek bed where he had to kick his windshield out and walk miles back to civilization and he is quite lucky he lived. When he came back to his car they thought he was dead and he drove a $800 Jeep with holes in the floor of it it for the next 10 months and had to crawl in the passenger side door.
Another friend had just moved into his new office with all his music equipment and with 24 hours of insurance lapse, someone broke in and stole $50k worth of his gear and he had to quit his business for 3 years. I think that’s enough.
I’ll end this with a rhyme.
When you freight, Mitigate.