Transport and cargo insurance

Cargo insurance is always recommended, particularly for international transport or high-value goods.

Although carriers are legally responsible for handling cargo with reasonable care, their liability is generally limited by international conventions and national legislation. This means that the amount of compensation available may be significantly lower than the actual value of the goods.

Cargo insurance helps protect businesses against financial loss if goods are lost, damaged, or stolen during transport. The need for insurance depends on factors such as the value of the shipment, the transport route, the mode of transport and the level of risk the shipper is prepared to accept.

The scope of cargo insurance depends on the policy and the level of cover selected. In general, cargo insurance covers physical loss of or damage to goods while they are in transit.

Depending on the policy, it may also cover events such as:

• theft or pilferage
• fire or explosion
• vehicle collisions or overturning
• vessel grounding or sinking
• damage during loading and unloading
• severe weather or other natural events
• contributions to general average in maritime transport.

Some policies provide 'all risks' cover, while others insure only specific named risks. Standard exclusions often include inadequate packaging, ordinary wear and tear, inherent defects in the goods, delays and losses caused by war or strikes, unless additional cover has been arranged.

As policy terms can vary, it is important to review the conditions and exclusions before shipping.

Who is responsible for damaged goods depends on the terms of sale, the transport contract and the cause of the damage.

While carriers are generally liable for loss or damage caused by their negligence, their liability is usually capped by international transport conventions or national law. Maximum compensation may be based on the weight of the goods rather than their commercial value.

Depending on the agreed Incoterms, the buyer or seller may also bear responsibility for the transfer of risk from seller to buyer during the transport process.

Cargo insurance provides additional financial protection by covering the value of the goods in accordance with the terms of the insurance policy, regardless of the carrier's limited liability. This can help businesses to recover the value of lost or damaged cargo more fully than if they were to rely on carrier liability alone.