When your goods are in transit, whether by air, sea, or road, they are exposed to risks you can't always control: damage, theft, fire, or loss. Most businesses assume their carrier's liability covers this, but it rarely does.
International transport conventions such as the CMR Convention (road), the Hague-Visby Rules (sea), and the Warsaw Convention (air) limit a carrier's liability to a fixed amount per kilogram, not the actual value of your goods. In practice, this means that if your shipment is lost or damaged, the compensation you receive under standard liability can be a fraction of what your goods are actually worth.
A cargo insurance policy is designed to cover the real value of your goods, not just the carrier's limited liability. Depending on the policy, this typically includes:
Some categories of cargo carry a much greater gap between carrier liability and actual value than others. Jewelry, precious metals, and other high-value goods are a clear example: a shipment's weight says very little about what it's actually worth, so the standard, weight-based liability limits are especially inadequate here. If you regularly ship jewelry or other high-value goods, see our Jewelry Logistics solution for how we handle these shipments.
Cargo insurance can typically be arranged in two ways: as a policy covering a single shipment, or as an open/annual policy covering all shipments over a given period. Which option makes sense depends on how often you ship and the value of your typical cargo.
Who is responsible for insuring the goods often depends on the Incoterms rule used in the sale. Under CIP and CIF, for example, the seller is required to arrange insurance covering the buyer's risk during transport. Under other rules, such as EXW or FCA, insurance is left entirely to the buyer to arrange. See our full guide to Incoterms for the insurance requirements under each rule.
Carrier liability is limited by weight under conventions like CMR, and rarely covers the full value of your goods. Cargo insurance is a separate policy that covers the actual value of the shipment.
It depends on the value of the goods and your risk tolerance. High-value or fragile shipments are generally the ones where the gap between carrier liability and actual value matters most.
This depends on the Incoterms rule agreed in the sale. Under CIP and CIF, the seller must arrange it. Under most other rules, it is the buyer's responsibility.
Exclusions vary by insurer and policy, but commonly include inadequate packaging, inherent defects in the goods, and delays not caused by physical loss or damage.
Procedures vary by insurer, but generally require prompt notification of the loss or damage, supporting documentation (such as the transport document and commercial invoice), and evidence of the goods' condition at the time of loss.
Cargo insurance is just one part of managing risk in international shipping, alongside the right Incoterms, careful documentation, and a logistics partner who understands where liability starts and ends.
At FORW, we help you plan your shipments so you know exactly where your risk lies, whether that is a routine consignment or a high-value shipment such as jewelry, and can make an informed decision about the cover you need.
Our team handles complex freight every day.
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