Should My Company Cover Marine Cargo Insurance or Not?

By: Michel Wouters, Worldwide Logistics Ltd.

Many people and companies are under the impression that shipments are automatically insured by the supplier, consignee, carrier or freight forwarder. Unfortunately this is a misconception.

Quite often we hear the statement: “We have been shipping for many years without covering any type of marine cargo insurance. We have never had a loss or damage to our goods!” While many companies feel that the insurance premium is costly it usually represents only a fraction of the cost of the merchandise and also gives peace of mind.

Damage, pilferage and loss of cargo are a daily fact. Accidents do happen and cargo ships sink. There are so many chances for some sort of freight claim. While I personally believe that no one purposely would damage goods, it happens!

Let’s analyze who covers what and how much.

  • Suppliers will only insure the goods if this agreed upon through a specific Incoterm. Many companies are under the impression that the vendor will insure the goods for the full landed cost value. For instance, the Incoterm “CIF“ states that the supplier is to insure the goods, however the obligation from the supplier is to insure only a minimal coverage, as stated under that specific Incoterm.

Carriers, such as steamship lines, NVOCC, airlines and truckers, usually have a limited cargo insurance liability which is not sufficient to cover the full value of the cargo, as demonstrated hereunder:

  • NVOCCs and steamship lines usually cover a limited liability insurance of $500.00 per package or container.
  • Airlines usually have a limited liability of carriage of $ 20.00 per actual kilogram.
  • Truckers frequently show on their Bills of lading a Dollar limitation on the value of the cargo or specify a dollar limit of liability.

Based on the above limitations many companies would have a hard time to withstand a total or partial claim to a shipment.

Many small to midsize companies find it impossible to secure their own marine insurance cargo policy because most insurance carriers require a larger volume of insurance. Most freight forwarders have an “open cargo insurance policy” which means that many freight forwarders have the capability of insuring your cargo from door to door, thus limiting your risks and exposures. This coverage is available on a case by case basis, and while not all commodities are included in the coverage, an exception can be requested from the insurance carrier. Be aware of the different coverage options available as well as the various clauses in the policy. The insurance premium is calculated based the commodity, origin/destination of the cargo, mode of transportation, and is based on a percentage of the value of the goods.

A common mistake companies make is to insure only the value of the cargo, instead of the landed cost. It is advisable to add all the landed expenses to the value. (Landed cost equals freight costs, duties and taxes, pier charges, marine insurance cargo premium etc.) While this will increase the premium slightly, it will cover those types of expenses in case of a claim.

One should make sure to give the freight forwarder written instructions to insure the goods, as well as the value to declare.

Cargo Marine Insurance coverage is a good way to mitigate loss of revenue and give peace of mind.


About Worldwide Logistics Ltd.

Worldwide Logistics Ltd. was formed with a single goal. That is to create a logistics company that could offer competitive and comprehensive solutions without compromising personal service. International & Domestic freight services offered spanning Ocean, Air, Truck & Rail.


Phone: 1.201.556.0909
Email: sales(at)wwllmail(dot)com
Address: 25 E. Spring Valley Avenue, Suite 205, Maywood, NJ 07607