Cargo Insurance Guide

Why cargo insurance matters

Many shippers assume the carrier covers their goods if something goes wrong. In reality, carrier liability under international conventions is severely limited — as little as $2 per kg for sea freight under the Hague-Visby Rules, or around $20/kg for air under the Montreal Convention.

For a $50,000 electronics shipment weighing 500 kg, the carrier's maximum liability might only cover $1,000. Cargo insurance fills this gap.

Types of cargo insurance

All-Risk (Institute Cargo Clauses A): The broadest coverage. Covers all accidental physical loss or damage during transit, subject to exclusions (inherent vice, improper packing, delay, etc.). Recommended for most shippers.

Named Perils (Institute Cargo Clauses B/C): Only covers specific listed events — fire, sinking, collision, stranding, etc. Cheaper but leaves significant gaps.

Total Loss Only: Minimal coverage. Only pays if the entire shipment is lost. Not recommended for most cargo.

How much does it cost?

Cargo insurance premium is calculated as a percentage of the insured value (typically CIF + 10%).

Typical rates: — General cargo, sea: 0.3%–0.6% — Electronics, sea: 0.5%–1.0% — Perishables, air: 0.4%–0.8% — High-value goods: 0.8%–1.5%

Example: $20,000 cargo, all-risk, sea freight. Rate: 0.45%. Premium: $90. That's very cheap protection for significant exposure.