That sinking feeling when you receive damage reports about your shipment is every importer’s nightmare. “But the carrier is responsible, right?” Think again. Carrier liability is minimal – often as low as $500 per container. If you’re shipping $50,000 worth of goods, you’re taking a huge financial risk.

Here’s what every business needs to know about cargo insurance.

What Standard Cargo Insurance Actually Covers

Physical Damage

• Container drops during loading/unloading

• Forklift accidents at ports

• Crushing from improper stacking

• Water damage from leaking containers

Theft & Pilferage

• Entire container theft

• Partial theft during transshipment

• “Mysterious disappearance” at terminals

Natural Disasters

• Storm damage to vessels

• Flooding in port areas

• Fire incidents aboard ships

Transport Accidents

• Truck collisions during inland transit

• Train derailments

• Vessel grounding or collision

What Most Policies Don’t Cover (Without Add-ons)

• Delay-related losses (unless specifically added)

• Product recalls due to quality issues

• Financial losses from market fluctuations

• Warehouse theft after final delivery

• Improper packaging claims

The Real Cost of Being Uninsured

Consider this actual claim scenario:

• Shipment value: $85,000 (electronics)

• Storm damage: Saltwater infiltration

• Damage extent: 40% of goods destroyed

• Carrier liability payment: $500

• Out-of-pocket loss: $34,000

The insurance premium for this shipment would have been approximately $425.

3 Common Misconceptions That Cost Businesses Money

1. “My Carrier’s Insurance is Enough”
Carrier liability is designed to protect the carrier, not you. The fine print limits their responsibility to a small fraction of your cargo’s actual value.

2. “Nothing Bad Will Happen to My Shipment”
Industry data shows approximately 1% of all container shipments experience some form of damage or loss. With 25 million containers shipped annually, that’s 250,000 problematic shipments every year.

3. “It’s Too Expensive”
Cargo insurance typically costs 0.3%-0.8% of your goods’ value. For a $20,000 shipment, you’re looking at $60-160 for full coverage – less than most business lunch meetings.

How to Choose the Right Coverage

Assess Your Risk Profile:

• High-value goods need all-risk coverage

• Perishables require temperature-controlled protection

• Fragile items need special handling clauses

Key Policy Elements to Verify:

• Door-to-door coverage (not just port-to-port)

• Transshipment protection

• Terrorism and strike coverage

• Natural disaster inclusions

Simple 3-Step Insurance Process

1. Declare shipment value when booking freight

2. Review policy terms – understand deductibles and exclusions

3. File documents – keep commercial invoices and packing lists accessible

When to Consider Additional Coverage

• Shipping during hurricane/typhoon season

• Moving through high-theft regions

• Transporting unusually fragile goods

• Using multiple transport modes

The Bottom Line

Cargo insurance isn’t an expense – it’s a strategic business decision. For less than 1% of your shipment value, you protect 100% of your investment.

Smart businesses don’t gamble with their supply chain. They calculate the risk, understand the real costs, and make informed decisions about protection.

Need help understanding your insurance options for an upcoming shipment? Get a clear explanation of what coverage makes sense for your specific products and routes.