Here is the uncomfortable truth most first-time shippers discover only after a loss: the carrier's liability is tiny. Under the Hague-Visby Rules, ocean carrier liability is capped per package or per kilo — often a fraction of your cargo's real value. That gap is exactly what cargo insurance fills.
Why Carrier Liability Isn't Enough
Carrier limits are set by international conventions, not by what your goods are worth. They also exclude many events and require you to prove fault. Cargo insurance, by contrast, pays out on the insured value regardless of who was at fault (subject to the policy terms).
How Premiums Are Set
A premium is usually a small percentage of the declared/insured value — commonly the commercial invoice value plus freight plus a markup (often CIF value + 10%). The rate reflects the cargo type, packaging, route, mode and loss history. For most general cargo it is a fraction of a percent — cheap insurance against a total loss.
Institute Cargo Clauses: A, B, C
- Clause A — the broadest "all risks" cover (subject to standard exclusions).
- Clause B — named perils, wider than C.
- Clause C — the narrowest, major-casualty cover only.
Most shippers choose Clause A for valuable or fragile goods. Always check exclusions (war, strikes, insufficient packing, inherent vice).
How to File a Claim
- Note damage immediately — clause the delivery receipt / B/L.
- Photograph everything and keep the packaging.
- Notify the insurer fast and request a survey if required.
- Preserve documents — invoice, packing list, B/L, the policy.
- Hold the carrier liable in writing to protect the insurer's recovery rights.
Sources & Further Reading
- Institute Cargo Clauses (A/B/C) — Lloyd's Market Association / IUA.
- Hague-Visby Rules — carrier liability limits.
- ICC Incoterms® 2020 — which party is obliged to insure (CIF/CIP).
