Cargo Insurance for International Shipments: What You Need to Know

Many shippers assume the carrier is responsible if their cargo is lost or damaged. In reality, carrier liability is strictly limited and rarely covers your actual loss. Cargo insurance fills that gap. Here is how it works and why it is worth having.

Key takeaways

Carrier liability is capped per kilogram and often a small fraction of your goods’ value — it will not make you whole.
Marine cargo insurance covers all modes, not just sea, and protects the value of your goods in transit.
“All Risks” is the broadest common cover but still has standard exclusions such as inherent vice, poor packing and delay.
Premiums are a small percentage of the insured value, typically written as CIF + 10%.
Declare an accurate value: under-insuring can cut a claim proportionally, over-insuring wastes premium.
A claim is far more likely to pay if you inspect on delivery, photograph damage, report promptly and keep all documents.

Why carrier liability is not enough

Under international conventions, a carrier’s liability for ocean freight is capped at a low amount per kilogram — often a small fraction of your goods’ value. Worse, carriers can escape liability entirely in cases such as severe weather or “errors in navigation.” So if a container goes overboard or is damaged in a storm, you may recover little or nothing without your own insurance.

What cargo insurance covers

Marine cargo insurance (the term covers all modes, not just sea) protects the value of your goods in transit. The broadest common cover is “All Risks,” which despite the name is not unlimited — it covers physical loss or damage from external causes, with standard exclusions such as:

Inherent vice (the goods spoiling due to their own nature).
Inadequate or unsuitable packing.
Ordinary wear, delay, or loss of market.
War and strikes, unless added back specifically.

Narrower named-perils cover is cheaper but only pays for the specific events listed.

How premiums and value work

Premiums are usually a small percentage of the insured value, which is typically the commercial invoice value plus freight plus a margin (often 10%) to cover incidental costs — commonly written as CIF + 10%.
Declare the value accurately. Under-insuring means a claim may be reduced proportionally; over-insuring wastes premium and can complicate claims.

Making a claim that pays

Insurance only helps if the claim succeeds. To protect yourself:

Inspect on delivery and note any visible damage on the delivery receipt before signing.
Photograph the damage, the packaging and the container seal.
Report promptly and keep all documents — invoice, packing list, B/L, survey reports.
Do not discard damaged goods or packaging until the insurer agrees.

Who arranges it

You can buy cover directly, through a broker, or through your freight forwarder, who can often add it to a shipment quickly. Under CIF or CIP Incoterms the seller arranges insurance; under other terms, make sure someone has — gaps happen when each party assumes the other covered it.

Frequently asked questions

Isn’t my cargo already covered by the carrier? Only to a strictly limited degree. A carrier’s liability is capped at a low amount per kilogram — often a small fraction of your goods’ value — and carriers can escape liability entirely in cases such as severe weather or errors in navigation. Cargo insurance covers the gap.

What does “All Risks” cargo insurance actually cover? It covers physical loss or damage from external causes, which is the broadest common cover. Despite the name it is not unlimited: standard exclusions include inherent vice, inadequate packing, ordinary wear, delay, loss of market, and war and strikes unless added back specifically.

How much does cargo insurance cost? Premiums are usually a small percentage of the insured value, which is typically the commercial invoice value plus freight plus a margin — commonly written as CIF + 10%. There is no fixed rate; it varies by cargo, route and cover.

How do I make a cargo insurance claim that pays? Inspect on delivery and note visible damage on the receipt before signing, photograph the damage, packaging and container seal, report promptly, keep all documents, and do not discard damaged goods until the insurer agrees.

Who arranges cargo insurance? You can buy it directly, through a broker, or through your freight forwarder. Under CIF or CIP Incoterms the seller arranges it; under other terms, confirm someone has, because gaps happen when each party assumes the other covered it.

The bottom line

For any shipment whose loss would actually hurt your business, insure it — carrier liability will not make you whole. All Risks cover is inexpensive relative to the value at stake, provided you declare an accurate value, pack properly, and document carefully if something goes wrong. Ask your forwarder to quote insurance alongside the freight so there is no gap. This article is part of our guide to importing from China: customs, duties and compliance.