Cargo Insurance Do You Need It?

What Is Cargo Insurance?

Cargo insurance protects the owner of goods against financial loss if the cargo is damaged, lost, or stolen during international or domestic transit. It covers risks that the carrier's standard liability does not — which is almost everything beyond basic negligence.

Without cargo insurance, you're relying on carrier liability limits that are shockingly low: about $500 per package for ocean freight (under the Hague-Visby Rules) and $9.07 per pound for domestic US trucking. That means a $50,000 shipment of electronics lost at sea might only get you $500 in carrier compensation.

Carrier Liability vs Cargo Insurance

Types of Cargo Insurance Coverage

• All-Risk (Institute Cargo Clauses A) — The most comprehensive coverage. Covers all risks of physical loss or damage except specific exclusions (war, nuclear, inherent vice, willful misconduct). This is what most shippers should buy.
• Named Perils (Institute Cargo Clauses B) — Covers only specific listed risks: fire, explosion, collision, overturning, sinking, earthquake, lightning, and washing overboard. Cheaper but leaves significant gaps.
• Minimum Coverage (Institute Cargo Clauses C) — Covers only major casualties: fire, explosion, collision, sinking, and overturning. Does not cover theft, weather damage, or handling damage. Rarely recommended.
• War & Strikes (W&S) — Separate add-on covering war, civil unrest, strikes, and political violence. Essential for shipments through high-risk regions.
• Open Policy / Blanket Coverage — Annual policy that covers all shipments automatically. Best for frequent shippers — no need to arrange insurance per shipment.

Need Cargo Insurance for Your Shipment?

We offer all-risk coverage from 0.3% of cargo value. Protect your goods from origin to destination with a single policy.

How Much Does Cargo Insurance Cost?

Cargo insurance typically costs 0.25% to 0.5% of the total insured value (cargo value + freight cost + 10% markup). For a $50,000 shipment, that's $125 to $250 — a small price to protect against total loss.

Rates vary based on the commodity (fragile goods and electronics cost more), trade route (higher-risk routes cost more), shipping mode (ocean is higher risk than air), claims history, and packaging quality. High-value or hazardous cargo may be quoted at 0.5% to 1.5%.

Most freight forwarders can arrange cargo insurance through their own marine insurance brokers, often at better rates than you'd get buying directly. Ask your forwarder for a quote — it's usually just a checkbox on the booking form.

When You Absolutely Need Cargo Insurance

• High-value shipments — If your cargo is worth more than you can afford to lose, insure it. Period.
• Ocean freight — The highest-risk mode. Containers fall overboard, ships sink, and general average declarations can make you liable for millions.
• Shipments through high-risk regions — Theft-prone ports, politically unstable countries, and routes through piracy zones.
• Fragile or perishable goods — Electronics, glass, pharmaceuticals, and food products have high damage rates during transit.
• Incoterms where you bear the risk — Under CIF, the seller must provide minimum insurance. Under FOB and EXW, the buyer bears all transit risk and should buy their own policy.
• Amazon FBA and e-commerce inventory — A lost container of 10,000 units can wipe out months of revenue and tank your Amazon ranking.

How to File a Cargo Insurance Claim

1. Document the damage immediately: Photograph all damage at the time of delivery. Note damage on the delivery receipt (Bill of Lading or POD). Do not discard any packaging — the insurer may need to inspect it.
2. Notify your insurer within 24-72 hours: Contact your insurance provider or freight forwarder immediately. Most policies require notice within 3 days of discovery. Late notification can void your claim.
3. Preserve the cargo and packaging: Do not dispose of damaged goods or packaging until the insurer authorizes it. They may send a surveyor to inspect. Moving or repairing goods before inspection can reduce your payout.
4. Gather all documentation: Prepare: insurance certificate, commercial invoice, packing list, Bill of Lading, photos of damage, delivery receipt with noted damage, and a written description of what happened.
5. Submit the formal claim: File the claim with all supporting documents. Include the claimed amount (replacement value, not retail). Most insurers process straightforward claims within 30-60 days.
6. Cooperate with the surveyor: The insurer may appoint a loss adjuster or surveyor. Provide full access and documentation. Their report determines the settlement amount.

Common Exclusions in Cargo Insurance

• Inherent vice — Natural deterioration, spoilage, or rusting that occurs without external cause.
• Inadequate packaging — If your goods were damaged because of poor packing, the claim may be denied.
• Delay — Financial losses caused by late delivery (missed sales, production delays) are not covered.
• Willful misconduct — Intentional damage or fraud by the insured.
• Nuclear, war, strikes — Excluded from standard policies but available as add-ons (War & Strikes clause).
• Gradual deterioration — Slow damage from temperature, humidity, or vibration over time (unless reefer breakdown is covered).

Cargo Insurance FAQ

Protect Your Shipments

We arrange All-Risk cargo insurance for every mode — ocean, air, and ground. Get a quote with insurance included.