Cargo insurance

Carriers are not insurers. Their liability for lost or damaged cargo is limited by international conventions, such as the Hague-Visby Rules for sea, the Montreal Convention for air and the CMR Convention for road, usually to an amount per kilogram or per package, and for some events, such as perils of the sea, they owe nothing at all. Cargo insurance fills that gap, commonly at 110 percent of the invoice value.

The standard London market wordings are the Institute Cargo Clauses. Clauses (A) give all-risks cover, subject to listed exclusions such as insufficient packing, delay and inherent vice. Clauses (C) are minimum cover for named major events like fire, sinking, stranding, collision and general average. Under Incoterms® 2020 the seller must insure at least to (C) level under CIF and to (A) level under CIP, unless the parties agree otherwise.

Insurance also protects cargo owners in general average, where security must be posted before goods are released even if they were not damaged; the insurer usually provides the guarantee. Forwarders can arrange cover for customers but should state clearly whether a shipment is insured and on what terms. A claim needs the policy or certificate, the invoice, the transport document and evidence of the loss noted at delivery.