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Cargo insurance, and the gap it closes.
Work out the insured value and premium for a shipment, then compare it with what the carrier would typically pay if the cargo were lost.
Why insure when the carrier is liable?
Limits are low. Carrier liability is capped per package or per kilo, and a sealed container with no packages listed on the bill of lading may count as a single package.
Defences are wide. Carriers are not liable for many causes of loss, such as perils of the sea or fire unless it was their fault, and proving a claim takes time.
General average. If the ship's owner declares general average, every cargo owner contributes to the shared loss before their cargo is released. Insurance normally covers that contribution.
Who insures? Under CIF and CIP the seller must insure (ICC (C) and ICC (A) minimum respectively); under most other Incoterms rules, arranging cover is up to the party at risk. See our guide on marine cargo insurance and general average and the Incoterms overview.
Ask about cover for my cargoFrequently asked questions
How is the insured value of cargo calculated?
Cargo is commonly insured for the CIF value plus 10%, which covers the goods, freight, insurance and part of the expected profit or extra costs. Under the CIF and CIP Incoterms rules, 110% of the contract price is the minimum the seller must insure.
How much does a shipping line pay if my cargo is lost?
Under the Hague-Visby Rules, carrier liability is generally limited to the higher of 666.67 SDR per package or 2 SDR per kg gross weight, and the carrier may not be liable at all in some situations. That is often far below the cargo's value, which is why cargo insurance matters.
What affects the cargo insurance premium?
The commodity, packaging, route, mode of transport, cover (for example Institute Cargo Clauses A, B or C), war and strikes cover, the claims history and the insurer's minimum premium all affect the price.
References: ICC Incoterms® 2020; ICAO (Montreal Convention limits); IMF (SDR rates); Lloyd's Market Association (Institute Cargo Clauses).
Guides on this topic
Marine Cargo Insurance and General Average: What Carriers Don't Cover
Carrier liability limits under Hague-Visby, the Institute Cargo Clauses and general average under the York-Antwerp Rules, and why you need cover.
TRADE FINANCELetters of Credit and Shipping Documents: Avoiding Discrepancies
How banks examine bills of lading and invoices under UCP 600, the discrepancies that delay payment, and where electronic bills of lading are heading.
INCOTERMSFOB vs FCA: Why Container Shippers Should Rethink FOB
FOB was written for goods loaded over the ship's rail. Why the ICC points container traders to FCA, and how the 2020 on-board B/L option works.
Know businesses that import or export?
Refer them to Apex Ocean Lines. We quote, book and manage the freight, and you earn commission on the shipments they move with us. Open to referral partners, sales agents and overseas forwarders.
Indicative only, not insurance or legal advice. Premiums, cover and liability depend on the policy, the contract, the applicable convention and the facts of each loss. Legal disclaimer With your permission we keep anonymous, cookieless usage statistics for our tools: Privacy.