Cargo insurance
Insurance protects the cargo owner from financial losses if the goods are damaged or lost in transit. In international transport there are more risks, so it is important to understand what and to what extent the policy covers.
What cargo insurance covers
Cargo insurance covers losses from damage, destruction or loss of the goods during transport, transshipment and storage. It works on any mode of transport — sea, road, rail, air and on multimodal routes.
ICC coverage conditions
| Clause | Scope of cover |
|---|---|
| ICC (A) | Maximum, “all risks” |
| ICC (B) | Medium, list of risks |
| ICC (C) | Minimum, major events |
The wider the cover, the higher the premium, so the clause is chosen for the type of cargo and route.
War and strike risks
War Risk and Strikes are covered by separate clauses. For routes through higher-risk zones they are included in the policy separately. This is relevant for sea transport — more details in sea cargo insurance.
Insured value and deductible
Usually cargo is insured at the CIF value plus 10% — the expected profit and costs. The deductible is the part of the loss the insured covers themselves. The premium depends on the deductible and the insured value.
Who insures: dependence on Incoterms
The obligation to insure depends on the delivery basis. Under CIF and CIP the seller insures the cargo in favor of the buyer, with CIP requiring wide cover. Under other terms the decision is made by the party to which the risk has passed — see Incoterms 2020.
Insurance policy and documents
Confirmation of insurance is an insurance policy or certificate. It states the cargo, route, coverage conditions, insured value and deductible. Under a letter of credit the policy is often part of the set of documents for the bank.
Subrogation and claims
After paying compensation the insurer may claim it from the guilty party — this is subrogation. To receive payment it is important to record the damage in the transport document and a report and to notify the insurer in time.
When insurance is advantageous
Insurance is especially important for valuable, fragile or long shipments with transshipments. The cost of the policy is usually small compared to the possible loss. Questions of organizing transport and insurance are handled together with transport logistics.
Frequently asked questions
Help with insurance
Trans-Hope helps choose insurance conditions for the type of cargo and route and take the delivery basis into account. Send the description of the cargo, its value and the route — we will suggest the optimal cover.
