Cargo insurance: protecting your shipments

International shipments face risks ranging from storms and theft to container damage and port strikes. Cargo insurance ensures you are compensated if something goes wrong.

Types of Coverage

• Institute Cargo Clause A (All Risks) — The broadest coverage. Protects against all risks of loss or damage except specific exclusions (war, strikes, nuclear). Recommended for most shipments.
• Institute Cargo Clause B — Covers named perils including fire, explosion, vessel sinking, earthquake, and washing overboard. Excludes theft and pilferage.
• Institute Cargo Clause C — The most limited. Covers only major casualties like fire, collision, and total loss of the vessel.

Who Should Insure?

The Incoterm determines the default: under CIF and CIP, the seller must arrange insurance. Under FOB, EXW, and FCA, the buyer typically arranges it. Regardless of the Incoterm, both parties should verify that adequate coverage exists.

How Much Coverage?

Standard practice is to insure for 110% of the CIF value — the extra 10% covers expected profit that would be lost if the goods are destroyed.

Filing a Claim

If goods arrive damaged, document everything immediately: photographs, the carrier's delivery receipt noting damage, and a written notice to the insurance company within the time limit specified in the policy (usually 3 days).