What does cargo insurance not cover?

As you may know, Cargo insurance is a type of insurance that compensates a buyer or seller of goods against cargo damage or loss of cargo as the carrier’s liability is usually not enough to cover the value of the freight. That’s why it’s important to consider cargo insurance for your cargo, it not only allows you to save time and money but sleep well and have peace of mind when a loss or damage occurs.

Through this article, you will learn more about cargo insurance and what it doesn’t cover.

What are the benefits of Cargo Insurance?

The main advantage of cargo insurance is that you minimize your financial loss even if your shipment is damaged or lost. The small investment (the premium) you pay provides peace of mind when your freight is in transit. Also, your cash flow is protected from unforeseen issues.

What does cargo insurance not cover?

Cargo insurance doesn’t cover risks and issues that the shipper has control over it. It is important to keep this in mind so you decrease the chances of your freight being damaged or lost, for instance an insufficient packaging, shipping delays, an incomplete or incorrect shipping product, among others.

And generally, policies exclude:

  • Damage due to inadequate packaging. If any damage to your freight is traced back to improper packaging of your freight, the policy won’t cover you.
  • Damage due to flawed products. If the carrier can demostrate that the damage was because of faulty items inside your freight, the policy won’t pay you back.
  • Certain types of freight. Some commodities as hazardous materials, certain electronic products, and other highly-valuable or fragile products, may be excluded or depending on your insurer can have other conditions.
  • Some modes of transportation. Some policies may only cover your cargo when it is onboard a ship, a plane, or a truck.

The insurance industry does not have standard cargo insurance guidelines, so exclusions and inclusions vary widely.

What does cargo insurance not cover?

How to make a claim

Carriers are assumed to be not liable for the damage or loss until proven otherwise. They also would do everything to reduce their responsibility or avoid it beforehand and you can see their limitations in the fine print of the Bill  of Lading.

Therefore, it is up to you to prove that the damage or loss happened under their custody or they were careless in handling your shipment. And when you do it successfully, your claim is approved and the insurance company pays you.

There are also details about your shipment that you need to recapture when you make a claim, which are:

  • Inventory number. The amount as stated in the inventory list given by your insurance provider. 
  • Item’s room. It means the location of your item before it was packed.
  • Item description. Indicate all the details about the item, like its dimensions, weight, visual indicators and  accessories. 
  • Damage. Describe what and where the damage occurred in your products.
  • Item age & date of purchase. If you don’t have any production records, estimate how old the item is inside and the date you bought it. 
  • Original and replacement cost. Write the original cost accurately and find out about the price of an item comparable to yours to determine the replacement cost.
  • Claim amount. If your claim is for damage, only indicate the cost to fix it. In case your claim is for loss, indicate the cost of your product or the amount established in the inventory. You may also be required to provide a proof of ownership or value by the underwriter of your policy.

Work with a specialized company with cargo insurance experience

As with any insurance policy, it helps to work with insurers and brokers who have experience they will have better insight into your risks. In CARGO CARE SERVICES we have 14 years of experience in the cargo insurance sector, placed your risk with the most liable brokers and insurance companies in the industry. We are able to assist you from the issuance of the certificate to the claim process with the insurer if it arises.


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