Cargo Insurance

John Edmonds, Freightos

At this stage, you might not be thinking about cargo insurance, but many importers only realize the value of cargo insurance after something goes wrong with their shipment. It makes even more sense given how easy cargo insurance is to procure. This chapter covers the range of cargo insurance options.

Option 1: Don’t Buy Cargo Insurance

You may choose not to take out cargo insurance and instead rely on filing a claim against the carrier if something goes wrong. This might seem like less hassle and cheaper but if something goes wrong it will be anything but.

  • Under carrier terms and conditions, you will get a minimal compensation, around $2.00/kg (2.2 lbs) for air freight and $500 per customary freight unit (which can vary from one container to one pallet) for ocean freight.
  • In some scenarios, like general average, carriers may not be legally liable, even if they caused the loss.
  • Making a freight claim is time-consuming, cumbersome, and has no guarantee of success. It can easily become a nightmare if the forwarder, insurer, and/or carrier is incompetent, uninterested, or enjoys playing hardball.

All in all, relying on carrier terms and conditions is only a good option if the value of your shipment is very low, or if you like living on the edge (and can afford the hit).

Option 2: Insure Your Cargo

In this option, you take out an insurance policy to cover the actual value of your goods. If you don’t think twice about insuring your business, home or car, then you shouldn’t think twice about insuring your international shipment, which is far more accident-prone.

Frankly, cargo insurance is so cheap, why wouldn’t you buy it?

The best way to buy cargo insurance is when requesting freight quotes:

  • You don’t need to shop around, because forwarders rates as agents compare favorably with the rates you’ll get going directly to the insurer.
  • You won’t be getting much difference in the cost of taking out insurance by shopping around. Frankly, though, there are much meatier charges on a freight quote to worry about.
  • It’s almost effortless to add in cargo insurance when requesting a quote.
  • You are guaranteed that your insurance was purchased before the goods are loaded.

Go for comprehensive “All Risk” cover, rather than loss coverage only, or basic risk. Some forwarders also offer cover for freight costs and “plussage”. Be mindful though, that even comprehensive cargo insurance has its limits because you won’t be compensated for any loss of sales.

Processing an insurance claim is much easier than lodging a freight claim with a carrier, and much more likely to provide satisfaction. Also, the insurance company, not you, will be doing most of the work.

Expert Tip

Ask your freight forwarder to forward you a copy of the policy. This makes sure the forwarder doesn’t forget to book insurance. Besides, you will need the policy if you have to make a freight claim. 


  • Take out cargo insurance rather than rely on carrier liability.
  • Ask for comprehensive cargo insurance, and check that you get it.

    Further Reading

  1. Freight Insurance: Why You Need to Cover Your Bases
  2. How To Make A Freight Insurance Claim

Freightos makes global trade frictionless with the world’s online marketplace for the trillion dollar international shipping industry, helping importers and exporters reduce logistics spend and save time with instant comparison, booking, and management of air, ocean, and land shipments from top logistics providers.

Download The Guide:

Enter your email below to get your free copy

  • The Experts Guide

    Take your product from idea to inventory with the ultimate step-by-step handbook

  • Amazon FBA

    Includes additional bonus chapters geared towards Amazon sellers

  • Crowdfunding

    Includes additional bonus chapters geared towards crowdfunding entrepreneurs

  • By clicking "GET BOOK", you agree to receive Freightos logistics technology updates. Not for you? You can unsubscribe at any time.