Why you need cargo insurance
Many shippers assume their goods are fully covered by the carrier during transit. They're not. Carrier liability is limited by international conventions and carrier tariffs — and it's far less than most people realize.
Under the Hague-Visby Rules (which govern most ocean shipments), carrier liability is limited to approximately $500 per shipping unit or $2 per kilogram, whichever is higher. For a container of electronics worth $200,000, the maximum carrier liability might be only $500. That's a devastating gap.
For air freight, the Montreal Convention limits airline liability to approximately $22 per kilogram. For a 1,000 kg shipment of high-value goods, your maximum claim would be $22,000 — regardless of the cargo's actual value.
What cargo insurance covers
A standard all-risk marine cargo insurance policy covers physical loss or damage to your goods during transit. This includes vessel sinking, collision, or grounding, fire, explosion, or natural disasters, theft or piracy, container falling overboard, water damage, and breakage due to rough handling.
Most policies cover the goods from warehouse to warehouse — meaning from the moment they leave the supplier's premises until they arrive at your final destination. This is broader than carrier liability, which only applies during the carrier's custody.
Types of coverage
Institute Cargo Clauses A (All Risk) provides the broadest coverage. It covers all risks of loss or damage unless specifically excluded. Common exclusions include inherent vice (spoilage due to the nature of the goods), inadequate packing, delay, and war or strikes (which can be added separately).
Institute Cargo Clauses B and C provide more limited named-peril coverage at lower premiums. These are suitable for less valuable or less fragile cargo.
How premiums are calculated
Insurance premiums are typically 0.3% to 0.7% of the insured value, depending on commodity type with fragile or high-theft items costing more, shipping mode since ocean is higher risk than air, trade lane since some routes have higher piracy or loss rates, and packaging quality.
The insured value is usually 110% of the cargo value (CIF + 10%) to cover incidental costs associated with a loss.
Use our calculator
Try our cargo insurance calculator at asrwe.com/tools/insurance-calculator to estimate premiums for your specific shipment. Or contact us at shipping@asrwe.com for a formal quotation from our underwriting partners.
