Carrier Liability Is Not Insurance
This is the most widespread misunderstanding in ocean freight. A shipping line does carry liability, but it is limited by applicable international conventions and its own terms of carriage. This limit is generally expressed per unit or per kilo, regardless of your cargo's actual value.
The consequence: for valuable goods, the compensation available under the carrier's liability can be far lower than your actual loss. Cargo insurance exists to close that gap.
What Cargo Insurance Covers
Coverage varies by policy, but generally includes:
- total or partial loss of cargo;
- physical damage during transport;
- damage related to handling and transshipment;
- maritime events (general average, grounding, fire);
- depending on the option chosen, theft, water damage, and certain additional risks.
The broadest policies cover "all risks" subject to exclusions; restricted policies only cover a list of named events. The price difference is real, but so is the difference in protection.
What's Generally Excluded
Almost all policies exclude:
- inadequate or unsuitable packaging;
- inherent vice of the goods (goods already defective at departure);
- normal wear and natural loss of weight;
- delay, and indirect financial losses caused by delay;
- certain war and strike risks, unless specifically extended;
- goods that were misdeclared.
The "inadequate packaging" exclusion deserves particular attention: it's the most common reason for claim denial on goods shipped in bales or bulk. Our guide Sorting and Packing Used Clothing Bales for Export illustrates the expected level of preparation.
How Insured Value Is Calculated
Insured value is usually built as follows:
value of the goods (invoice) + freight cost + related charges + an agreed uplift
This uplift reflects the fact that a loss costs more than the bare value of the goods: the whole operation has to be started over. Under-insuring, conversely, leads to a proportionally reduced payout.
The premium cost depends on the nature of the goods, the route, the container type, the packaging, and the coverage chosen. Fragile or high-value cargo, and routes with more handling or transshipment, generally carry a higher rate.
Insurance and Incoterms
The Incoterm tells you who must insure, not whether you are properly insured.
- Under CIF, the seller takes out insurance, often at the minimum level. Check the actual scope.
- Under FOB or CFR, the buyer bears the risk from the moment of loading: it's up to them to insure.
- Under DAP or DDP, the seller bears the risk further along, so the interest in insuring belongs to them.
See Incoterms Explained Simply for details on risk transfer.
In the Event of a Claim: The Right Reflexes
- Don't sign an unreserved receipt if damage is visible. Note the reservations precisely.
- Photograph the closed container, the seal, then the goods as they're unloaded.
- Keep the seal and note its number.
- Notify the insurer promptly, within the deadlines set by the policy.
- Don't discard damaged goods before the assessment.
- Assemble the file: bill of lading, invoice, packing list, photos, damage report.
A solid claim file is built in the first few hours. After that, reconstructing it becomes much harder.
Should You Always Insure?
Three questions are usually enough to decide:
- If the goods disappeared entirely, what would be the real impact on your business?
- What is the premium cost relative to the value of the cargo?
- Could you afford to buy and reship without insurance?
For a container of significant value, the premium is almost always small compared to the risk — and far smaller than the cost of replacing the goods and re-shipping them from scratch.
FAQ
Does insurance cover delays? Generally no. Losses caused by delay are excluded from standard cargo policies.
Is a sealed container covered against theft? Depending on the coverage chosen. Broad coverage typically includes theft; restricted policies do not.
What value should be declared? The commercial value of the goods, plus freight and charges, according to the policy's terms. Don't under-declare: compensation would be reduced proportionally.
Does VELOX offer cargo coverage? Ask our team at the time of booking: we'll tell you what options are available for your goods and route.
Conclusion
Insuring your cargo isn't an administrative add-on — it's the counterpart to the fact that the carrier doesn't compensate for actual value. Request a quote and raise the question of insurance right from the start, not after loading.
Related reading
These VELOX guides complement this topic:
