Marine Cargo Insurance Explained: Coverage, Costs, Claims & FAQs for Importers and Exporters
If you ship goods internationally, marine cargo insurance is essential to protect your cargo from loss or damage while in transit. However, many business owners and logistics managers often have questions about how it works, what it covers, and whether it’s really necessary.
In this post, we’ll answer the most common concerns about marine cargo insurance and help you make an informed decision.
What Does Marine Cargo Insurance Cover?
Marine cargo insurance typically covers loss or damage to goods during transit by sea, air, or land. Common risks include:
- Theft
- Fire or explosion
- Vessel sinking or capsizing
- Collision
- Piracy
- Natural disasters (storm, earthquake, etc.)
- General Average (a shared loss if cargo is jettisoned to save the vessel)
Depending on your policy, you may also get coverage for risks during inland transit (e.g., from the warehouse to the port and from the destination port to the final delivery point).
Is Marine Cargo Insurance Mandatory?
While not legally required, many exporters, importers, and freight forwarders highly recommend marine cargo insurance to protect their goods and mitigate financial risk. Some buyers may even require sellers to insure shipments based on Incoterms like CIF (Cost, Insurance, and Freight).
All-Risk vs. Named Perils: What’s the Difference?
- All-Risk: Provides broad coverage for most unforeseen events that cause damage or loss, subject to standard exclusions.
- Named Perils: Only covers specific risks listed in the policy, such as fire, theft, or collision.
If you ship high-value or fragile goods, an All-Risk policy is often worth the extra premium.
What is General Average, and Why Should I Care?
General Average is a maritime law principle where all cargo owners contribute proportionally to losses if part of the cargo or the ship itself is sacrificed to save the voyage (e.g., jettisoning containers during a storm). Marine cargo insurance can protect you from having to pay large out-of-pocket contributions.
Does Marine Cargo Insurance Cover Delays?
Most policies do not cover delays unless they result in physical damage to the goods (e.g., spoilage due to temperature control failure). However, you can explore additional coverage such as trade disruption insurance if delay-related risks are a major concern.
How is the Insured Value Calculated?
Marine cargo insurance often uses the CIF value + 10% as a common standard, but some policies may base coverage on:
- Invoice value
- Cost of goods + freight
- Selling price (for exporters)
Be sure to clarify this with your insurer to avoid being underinsured.
What Documents Are Needed to File a Claim?
In the unfortunate event of cargo loss or damage, you will typically need:
- The commercial invoice
- Bill of lading
- Packing list
- Survey or inspection report
- Photographs of damage
- Notice of claim within a specified timeframe
Prompt reporting and accurate documentation are key to a smooth claims process.
Are There Common Exclusions to Be Aware Of?
Yes. Standard exclusions often include:
- Inherent vice (natural deterioration of goods)
- Improper or inadequate packing
- Delay without physical loss/damage
- War and strikes (can be added as extensions)
- Losses due to willful misconduct
Always review your policy carefully to understand what’s not covered.
Is Coverage Door-to-Door or Port-to-Port?
Some policies only cover port-to-port, while others provide door-to-door protection, including inland transit to and from the ports. If you require full supply chain protection, make sure your policy covers the entire journey.
How Much Does Marine Cargo Insurance Cost?
Premiums vary based on:
- Type of goods
- Shipping route and destination country
- Value of cargo
- Mode of transport
- Coverage limits and deductibles
In general, the cost is a small percentage of the cargo value but can vary significantly depending on risk factors.
Can I Buy Marine Cargo Insurance for a Single Shipment?
Yes! You can choose between:
- Single shipment coverage (ideal for one-off shipments)
- Open cover/annual policies (better for regular shippers)
Discuss your shipping frequency with your insurance advisor to select the most cost-effective option.
What About Hidden or Concealed Damage?
Concealed damage—where goods are damaged inside but the packaging looks intact—is a valid concern. Most policies require prompt unpacking and inspection at destination, and damage must be reported within a specific period (usually within 3-7 days) to be considered for claims.
Get Expert Advice for Your Marine Cargo Insurance
Still have questions or need a customized quote? At Your Insurance Guy, we specialize in marine cargo insurance tailored to your specific trade and shipping needs.
👉 Contact us now to get personalized advice and protect your cargo with confidence!