Shipping goods internationally comes with its fair share of risks—damages, theft, delays, or even complete loss of cargo. Whether you are transporting high-value electronics, fragile goods, or industrial equipment, ensuring that your shipments are protected with the right insurance coverage is crucial.
1. Why Cargo Insurance is essential for international shipping
Even with the best logistics providers, external factors like weather conditions, handling errors, and geopolitical events can impact your shipments. Some of the most common risks include:
Physical damage – caused by rough handling, accidents, or improper packaging
Theft and pilferage – particularly in high-risk transit areas
Delays and loss – due to customs holds, missing documents, or transport failures
Natural disasters – storms, floods, fires, or earthquakes
Political instability – strikes, embargoes, or civil unrest in transit regions
Having the right cargo insurance ensures that you are financially protected against these risks, avoiding significant losses that could disrupt your supply chain.
2. Types of Cargo Insurance for international shipments
A. All-risk cargo insurance
This is the most comprehensive type of insurance, covering almost all unforeseen events during transit, except for specifically excluded risks (such as improper packaging or intentional damage).
Best for: High-value and fragile cargo, electronics, pharmaceuticals, luxury goods
B. Total loss insurance
This covers the entire shipment but only in cases of total loss (e.g., when the cargo is completely destroyed or lost at sea). It does not cover partial damages.
Best for: Bulk shipments, large industrial cargo
C. General average insurance
In maritime transport, if a ship is in distress, the captain may order some cargo to be jettisoned (thrown overboard) to save the vessel. This insurance ensures that cargo owners do not bear the full cost alone in such situations.
Best for: Maritime shipments, containerized cargo
D. Land cargo insurance
Specifically designed for road and rail shipments, this policy covers damage or theft during overland transport. Coverage varies depending on the country and provider.
Best for: Shipments traveling by truck or rail across multiple borders
E. Air cargo insurance
Air shipments have a lower risk of damage or theft, but delays and handling issues can still occur. This insurance protects against loss, delays, and handling-related damages.
Best for: Urgent shipments, high-value goods
3. How to choose the right insurance for your cargo
A. Assess your shipment value & risk factors
What is the total value of your cargo?
Is it fragile, perishable, or high-value?
What routes and transport modes are being used?
Are there known security or weather risks along the route?
B. Verify carrier liability coverage
Most freight carriers offer limited liability coverage, but this is not full insurance. In case of damage or loss, carrier liability only compensates up to a certain amount per kilogram, which might not cover the full value of your shipment.
Example: If a carrier compensates $2 per kg for lost cargo, but your goods are worth $20 per kg, you could face major financial loss without additional insurance.
C. Compare insurance providers
Choose a reliable insurance provider with experience in cargo policies.
Check for customized coverage that fits your shipping needs.
Look for fast claims processing and global support.
D. Understand exclusions and limitations
Every insurance policy has exclusions. Some common ones include:
Poor packaging
Cargo abandonment
War and terrorism
Inherent vice (natural product deterioration)
Always read the fine print before purchasing an insurance policy.
4. How to file a Cargo insurance claim
If your cargo is damaged, lost, or stolen, follow these steps to ensure a successful claim:
Step 1: Document everything immediately
Take photos and videos of the damaged cargo upon arrival.
Keep all shipping documents, including invoices and insurance policies.
Get a damage report from the carrier or warehouse staff.
Step 2: Notify the insurance provider
Most insurers require notification within a specific timeframe (often 3-7 days).
Submit all required documents as soon as possible.
Step 3: Work with the adjuster
The insurance company will assign a claims adjuster to investigate the damage.
Cooperate by providing any additional evidence they request.
Step 4: Receive compensation
If the claim is approved, payment is usually processed within weeks.
If denied, you can appeal with further supporting evidence.
Cargo insurance is an essential component of risk management in international shipping. Choosing the right policy protects your business from financial loss and ensures peace of mind when transporting valuable goods across borders.
By understanding different insurance options, assessing risks, and knowing how to handle claims, you can safeguard your cargo and keep your supply chain running smoothly.
Need expert assistance with your freight insurance? Contact Kuehne+Nagel to explore tailored coverage options for your shipments.