Legally, insurance is a contract between an insurance company and the policyholder. All carriers are required to carry a minimum level of liability insurance, known as "Carrier's Liability Insurance."
However, a carrier's liability is very limited. This liability, often termed "Hull Insurance," covers the ship's hull, its equipment, and sometimes the crew against natural disasters, accidents, or acts of war. As you can see, the cargo itself is not covered under this type of insurance, making it an unreliable safeguard for your goods.
Therefore, shippers can opt for Cargo Insurance to protect their goods against loss, damage, or theft. Typically, coverage extends throughout storage and transportation until the goods reach their final destination.

Insurers determine premiums based on a percentage of the cargo's value and the following criteria:
● The nature of the goods – e.g., Are they hazardous?
● Dimensions, weight, and specifications of the goods.
● Origin and destination of the shipment.
● The route the carrier takes from origin to destination port.

The specific terms of your cargo insurance are detailed in the policy issued by the insurer. As with all insurance documents, you should read the policy carefully. Generally, you can file a claim if the goods are lost or damaged, regardless of the cause, provided you are not at fault yourself. The claims procedure is outlined in the insurance documents.

Under most cargo insurance policies, a claim is payable when insured goods are lost or damaged and assessed as such by the insurer. The carrier is responsible for reporting loss or damage to the customer. The policy documents specify the covered perils in detail. Claims must be filed within stipulated time limits to be valid. For example:

For sea freight damage: Claims for visible damage must be raised immediately upon receipt of goods; for concealed damage, within three days of discharge.

For air freight damage: Claims should be filed within 14 days of receiving damaged goods.

For loss of goods: The trigger for a claim is notification in case of total loss, or confirmation of actual loss upon receipt for partial loss.

Processing most cargo insurance claims typically takes several weeks. This involves quantifying the loss and preparing a claims report. Furthermore, the client usually needs to sign a discharge receipt before compensation is released.

Cargo insurance typically covers the full value of lost or damaged goods, up to 110% of the commercial invoice value, and may cover other associated costs (if applicable). Therefore, the actual compensation depends on the goods' value and any related transport costs declared by the shipper and included in the premium by the insurer.

Since your freight forwarder coordinates almost every aspect of your shipment, it may be wise to have them handle cargo insurance as well. Choosing this option does not mean the forwarder acts as the insurer.
Instead, the forwarder acts on your behalf to liaise with the cargo insurer, submit the written application, pay the premium, and obtain an insurance policy bound by its terms and conditions.
The cost for this service is usually included in your quotation. In the event of a claim, the forwarder will file the claim with the insurer on your behalf and manage all related matters until settlement is reached.

You may choose to arrange cargo insurance yourself. This almost certainly involves contacting multiple insurers, detailing your shipment to each, and comparing quotes received. If your goods are lost or damaged, you would need to submit the claim, sign discharge receipts and letters of abandonment, and communicate with the insurer until settlement.

When you ship goods by air or sea, you entrust them to freight forwarders and carriers. You rely on these service providers to transport your goods safely from origin to your specified destination.
The vast majority of air and sea shipments are completed successfully. However, as with everything in life, there are no absolute guarantees. All transportation involves some degree of risk.
Risks your cargo may face include fire, theft (including piracy), damage, and abandonment. For peace of mind, it is advisable to insure your cargo, just as you would insure your car or home contents. Without insurance, you bear the full cost of any loss or damage.