Marine Cargo Insurance

Goods can be damaged at sea, in an aircraft, on a truck or during handling between them, and cargo cover is designed for the shipment exposure described in the policy. Start with who bears the risk: a sales contract and its chosen Incoterms rule can tell buyer and seller when risk passes, and the party with that risk should check that adequate insurance is in place.

Who must buy insurance is a separate question, because under Incoterms 2020 CIF and CIP impose insurance duties on the seller, but they differ in transport mode and minimum coverage level, and other terms need their own reading. The International Chamber of Commerce explains insurance duties under CIP and CIF: CIP can be used across transport modes and has a seller insurance obligation, while CIF is a sea and inland-waterway term.

A freight carrier's liability is not the same as cargo insurance, since limits, defences and proof requirements may leave a gap, so check the actual insurance evidence. One policy can cover a single voyage, whereas an open cargo policy may cover many shipments under agreed reporting and route terms.

Define the journey, because warehouse-to-warehouse wording can sound broad but actual attachment, termination and storage provisions control what happens at each stage. Identify the goods, since fragile machinery, temperature-controlled food and bulk commodities have different risks, and choose a valuation basis, as invoice value, freight, duties and an agreed uplift may be included according to policy wording.

Read the clauses, because the Institute Cargo Clauses and other forms have differing scopes, and even broad cover still contains explicit exclusions and conditions. A common misconception is that all risks means literally all losses, when exclusions can apply to delay, inherent vice, ordinary leakage, insufficient packing and certain war or strike risks, depending on wording.

Consider optional risks, since war and strike cover may require separate terms or premium and route and geopolitical changes can affect availability. Check packaging, because poor packing may contribute to damage and a coverage dispute, so document how goods were prepared and loaded, and check temperature controls, as set points, data logs and backup procedures can be relevant for perishables and a policy may require specified equipment or handling.

Understand deductibles, because the insured may bear the first part of a claim and the right comparison is premium plus retained risk rather than premium alone. Watch limits, since a per-shipment or conveyance maximum may be too low if several orders move together.

Check certificates: a broker certificate indicates arranged cover but should be matched with the policy and shipment details, and it is not a substitute for reading exclusions. Record transit milestones, because bills of lading, air waybills, packing lists and delivery receipts help show when and where loss occurred, inspect on arrival by noting visible damage promptly, preserving packaging and notifying the carrier and insurer as required, and mitigate safely by separating damaged goods from usable goods where practical and recording salvage options while avoiding destroying evidence before inspection when it is safe to retain.

Claims need proof such as photos, invoices, survey reports and communications that support the amount and cause of loss, and since a buyer, seller or bank may have a claim to proceeds under documents, the insured and loss payee should be named correctly. Avoid a coverage gap at handoff because cargo may sit at a port or warehouse longer than expected, so check storage and delay provisions before relying on transit language, and align the policy with the contract, route and goods.