Cargo
insurance

Cargo insurance provides protection against physical loss of or damage to your goods while they are in transit — at sea, in the air, on the road, in a warehouse and during handling between all of them. We arrange it alongside your booking, on the same shipment file, so the cover starts when the cargo moves rather than when someone remembers to ask.

The gap most shippers do not know they have

There is a widespread and expensive assumption that a carrier is responsible for the goods it carries. It is responsible — but only in a narrow, capped and heavily conditioned way, and that responsibility is not insurance.

Under the Hague-Visby Rules, which govern most ocean bills of lading, a carrier’s liability for loss or damage is limited to roughly 666.67 SDR per package or 2 SDR per kilogram, whichever is higher. In practice that is a few thousand dollars for a container that might hold two hundred thousand dollars of cargo. Air carriage under the Montreal Convention is limited by weight too, at around 22 SDR per kilogram. Road carriage under CMR is limited to 8.33 SDR per kilogram.

Worse, the limit is a ceiling, not a floor. The carrier only pays at all if you can prove the loss happened in its custody and that it was at fault. The standard defences — perils of the sea, act of God, inherent vice, insufficient packing, error in navigation — are wide, and a carrier that successfully raises one pays nothing.

Carrier liability answers the question “was the carrier at fault?”. Cargo insurance answers the question “is my money safe?”. They are not substitutes.

General average — the risk nobody expects

General average is the principle, older than modern insurance, that when a vessel and its cargo face a common peril and a sacrifice is made to save them, every cargo owner on board contributes to the loss in proportion to the value of their cargo. A fire in a hold, a grounding, an engine failure requiring salvage — any of these can trigger a declaration.

When it happens, the average adjuster will not release your container until you post a general average guarantee, typically a percentage of the cargo value. If your cargo is insured, your underwriter posts it and your box moves. If it is not, you post it yourself, in cash, before you see your goods — and cases have taken years to settle. This is the single most compelling reason to insure, and it has nothing to do with whether anyone did anything wrong.

What all-risks cover actually covers

Marine cargo policies are written on the Institute Cargo Clauses. There are three standard levels:

• Clauses (A) — all risks. Covers physical loss or damage from any external cause except the listed exclusions. This is what we normally recommend and what most banks and letters of credit require.
• Clauses (B) — named perils, broad. Fire, explosion, stranding, grounding, collision, general average sacrifice, jettison, washing overboard, entry of water, plus loss of a package during loading or discharge.
• Clauses (C) — named perils, minimum. The major casualty events only. Cheap, and rarely adequate for containerised general cargo.

Standard exclusions across all three include wilful misconduct, ordinary leakage and wear, insufficient or unsuitable packing, inherent vice, delay, insolvency of the carrier, and war and strikes — the last two are separately insurable and usually should be.

When cover matters most

• High-value or concentrated cargo. A single container of electronics, machinery or branded goods can exceed the carrier’s entire liability limit many times over.
• Project and heavy-lift movements. Bespoke, long-lead-time equipment where a damaged item does not simply get replaced from stock — and where delay to a project site costs more than the item.
• Cargo that is transhipped or cross stuffed. Every additional handling is an additional exposure, and establishing where damage occurred across multiple custodians is precisely the argument that insurance saves you from having.
• Letter of credit and CIF sales. Where the terms of sale oblige the seller to insure, and the bank will reject documents without a certificate that matches.
• Incoterms that leave you exposed. Under CIF and CIP the seller insures; under FOB, CFR, FCA and CPT the risk passes to the buyer at a point where, very often, nobody has arranged anything.

How much to insure for

The market convention is CIF value plus 10 per cent. The uplift covers the incidental costs of a loss — the freight you have already paid, duty, survey fees and the margin you would otherwise lose. Under-declaring the value to save premium is a false economy: policies apply average, so if you insure for half the value you recover half of any partial loss, not the full amount up to the sum insured.

What we do

• Arrange cover with the booking. Cover is placed against the same shipment file, so the sum insured, the route, the equipment and the commodity all match the bill of lading rather than being re-keyed from memory.
• Advise on the right clause set. A palletised FMCG consignment and an out-of-gauge process vessel do not need the same policy, and we will say so.
• Issue certificates that satisfy banks. Where a letter of credit specifies cover, the certificate has to match the credit exactly or the documents get rejected. We check it before it is issued, not after.
• Handle the claim with you. We appoint the surveyor, preserve the evidence, hold the carrier on notice within the time bar, and assemble the file. Our operational photography at handover is frequently the difference between a paid claim and a disputed one.

If something goes wrong

Act immediately and in this order:

1. Do not sign a clean receipt. Note the damage on the delivery note or CMR at the moment of delivery. A clean receipt is very hard to argue against later.
2. Give written notice to the carrier straight away. Time bars are short and unforgiving — three days for apparent damage under CMR, and one year to commence suit under Hague-Visby.
3. Photograph everything before the cargo is moved, including the container number, the seal and the stow.
4. Tell us and the underwriter at once so a surveyor can attend while the evidence is still in place.
5. Mitigate. Take reasonable steps to prevent further loss. The policy requires it, and the cost of doing so is generally recoverable.

Arranging cover

Tell us the commodity, the packing, the route, the Incoterm and the invoice value, and we will come back with a premium and the appropriate clause set. Cover must be in place before the cargo commences transit — a policy cannot be bought retrospectively once a loss is known, and a shipment already on the water is a shipment you can no longer insure.

Cargo insurance is arranged through licensed insurers and intermediaries. The summary above is general information about how marine cargo cover works and is not insurance advice, a quotation, or a statement of the terms of any particular policy. Cover, exclusions, limits and conditions are governed solely by the policy wording and the certificate issued for your shipment.