- Carrier liability is limited — usually just $2/kg for sea freight
- All-Risk insurance covers most accidental loss and damage
- Insure at 110% of cargo value to cover freight costs too
- Premium is typically 0.3%–1.5% of insured value
- File claims within the timeframe stated in your policy
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.