Overview
If you ship goods, you may face financial loss when cargo is lost or damaged in transit unless you have appropriate insurance.
Freight carriers typically maintain a limited legal liability that is often expressed per pound and may be capped by the invoice value of the shipment, so carrier coverage alone may not be enough for higher‑value goods.
Key takeaways
- Carrier liability is limited; it often does not cover the full value of most shipments.
- Freight policies vary by mode, peril, and storage—read exclusions and limits carefully.
- File claims promptly with both the carrier and your insurer; ideally within 24 hours of discovering loss.
- Work with an insurance professional to match coverage to your supply chain risks.
How it works
Insurers sell cargo or freight coverage that reimburses the owner for physical loss or damage to goods while in transit or in temporary storage, subject to policy limits and exclusions.
Carriers are usually responsible for claims under their own liability limits, but a separate freight policy fills gaps by covering the declared value above carrier limits and by broadening covered perils.
If your shipment value exceeds carrier limits, consider buying Freight Insurance: Protecting Your Business to ensure adequate protection and a clearer claims process.
What it may cover (and what it may not)
Typical cargo insurance covers physical loss or damage caused by events such as accidents, fire, theft, water damage, or containers lost at sea, subject to policy terms.
Common exclusions include war, strikes, intentional misconduct, inherent product defects, or inadequate packaging unless explicitly included.
For shipments that cross borders or involve international terms of sale, you may need additional clauses or tailored wording—see Why Cargo Insurance is Crucial for International Shipments for considerations specific to cross‑border transport.
Note that cargo insurance covers only the insured goods; it generally does not reimburse for lost sales, delays, or labor costs unless a separate business‑interruption or contingent policy applies.
Common mistakes to avoid
- Relying solely on carrier liability without verifying limits, deductibles, or exclusions.
- Failing to declare the correct value of goods or to insure to full invoice value.
- Overlooking storage or warehouse exposure when goods are held between legs of transit.
- Missing time limits for notice and filing of claims with carriers and insurers.
Questions to ask an agent
- What perils are covered and which are excluded under the policy?
- How are limits, deductibles, and valuation (invoice vs. replacement cost) handled?
- Does the policy cover multimodal transit and warehouse storage between shipments?
- What documentation and timelines are required to file a claim?
Next steps
Review your current contracts and carrier terms to identify gaps between carrier liability and the value of your shipments.
Obtain quotes for policies that match your transport modes and risk tolerance, and discuss policy wording and claims handling with your broker or insurer.
If you want professional help comparing options or starting a policy, talk to an agent who can review your specific needs and provide tailored recommendations.
Frequently Asked Questions
What should I do first after discovering damage to a shipment?
Notify the carrier and your insurer immediately and preserve packaging and evidence for inspection; prompt notice helps preserve claim rights.
Does freight insurance cover theft during storage?
Coverage depends on the policy wording; some policies cover warehouse storage while others exclude it, so confirm storage clauses before shipping.
Is “all risk” insurance always better than named‑peril coverage?
All‑risk policies are broader but more expensive; named‑peril policies limit coverage to specified causes and can be cheaper if you only need narrow protection.
Who is responsible for filing a claim, the shipper or the consignee?
Either party can file, but the insured party named on the policy should file the claim and provide required documentation to the insurer.