There are unpredictable risks associated with the transport of goods, such as damage, loss or delay of goods. Cargo insurance, as an important means to protect the safety of goods, can effectively reduce the shipper’s economic losses. This article will provide you with a detailed analysis of the basic concepts, types, modes of operation and related costs and other key elements of cargo insurance.

What is cargo insurance?
Cargo insurance protects goods against losses caused by natural disasters, accidents, or other external causes during transport and storage. Whether by road, rail, Air, or ocean Freight, cargo insurance provides financial compensation to shippers, consignees, or related parties to reduce the losses caused by transport risks.
Types of cargo insurance
Classification by mode of transport
Ocean Freight Cargo Insurance: covers goods transported by sea.
Air Freight cargo insurance: covers cargo risks in air transport.
Cargo insurance for land transport: for road or Railway Freight.
Classification by coverage
All Risks: Provides comprehensive coverage for cargo damage, loss, etc.
Single Risk: Provides coverage for specific risks (e.g., fire, theft).
Classification by frequency of cargo transport
Single Carriage Insurance: insures against a single shipment.
Long-term insurance: for companies with frequent shipments.
How does cargo insurance work?
Insuring: The customer chooses a suitable insurance plan, signs an insurance contract with the insurance company, and pays the premium.
Assessing the risk: The insurance company assesses the value of the goods, the transport route, the risks that may be encountered, and other factors.
Issuance of policy: Once all the details are finalized, the insurance company will issue a formal insurance document.
Claims processing: In case of an accident resulting in loss of goods, the insured must report to the insurance company and submit relevant supporting documents to initiate the claims process.
Payment: After investigation and verification, the insurance company compensates the insured in accordance with the contract.

Is cargo insurance necessary?
Cargo insurance is not mandatory, but it is essential for the safety and security of your cargo. It is particularly necessary for high-value, perishable, or internationally shipping cargoes to effectively reduce losses from uncontrollable risks.
Why is cargo insurance needed?
Reduce economic risk: receive financial compensation for damaged or lost goods.
Protect against unpredictable accidents, such as natural disasters, accidents, theft, etc.
Improve customer trust: ensure the safety of goods and improve customer satisfaction.
Adapt to international shipping needs: some international trade contracts require cargo insurance.
How is the cost of cargo insurance calculated?
The cost of cargo insurance (premium) is usually calculated based on the following factors:
1. Cargo value: the higher the value of the goods, the higher the premium.
2. Transport method: Ocean Freight, Air Freight, and Land Freight have different risks and costs.
3. Transport route: long-distance international transport has higher risks, and the premium increases accordingly.
4. Insurance coverage: comprehensive insurance is more expensive than single insurance.
5. Type of goods: Some goods (such as dangerous goods and valuables) are riskier than ordinary goods, so the insurance costs are higher.
Calculation formula:
Insurance premium = insured amount × insurance rate
For example, if the value of the goods is 10,000$ and the rate is 0.5%, the insurance premium is:
10,000$ × 0.5% = 50$
How do I make a cargo insurance claim?
Promptly notify the insurance company.
When a loss covered by insurance occurs to the goods, the insured (the owner of the goods) should notify the insurance company as soon as possible and provide basic information such as the insurance policy number and the damage to the goods. The time of notification is generally required within a specified period. For example, some insurance terms stipulate that the insured should notify the insurance company within 24 hours after learning of the loss of the goods.
Provide the necessary supporting documents.
The insured needs to provide the insurance company with a range of supporting documents to support the claim, including transport documents (such as bills of lading and waybills), commercial invoices, packing lists, loss lists, inspection reports (issued by a professional inspection agency), and accident certificates (such as traffic accident liability certificates and meteorological disaster certificates). These documents can prove the loss and value of the goods and that the cause of the loss falls within the scope of insurance liability.
Cooperate with the insurance company’s investigation and verification.
The insurance company will investigate and verify the claim, and the insured should actively cooperate. This may include providing additional information and assisting the insurance company with on-site inspections. For example, the insurance company may require the insured to provide surveillance footage of the goods while they are stored in the warehouse to determine whether the insurance covers the loss of the goods.
Awaiting the compensation result
After the investigation and verification, the insurance company will determine the compensation by the insurance contract and pay the insured. Calculating the compensation amount will consider factors such as the actual value of the goods lost, the insured amount, and the deductible.
What is the difference between cargo insurance and freight insurance?
Cargo insurance: focuses mainly on the goods and covers losses during transportation and storage.
Freight insurance covers goods: means of transport (such as ships and vehicles), and freight charges. It has a wider scope of coverage, considering not only the loss of goods but also damage to the means of transport and loss of freight charges.