“We paid the freight — if the cargo is ruined on the ship, the carrier pays, right?” They do — and the figure will stun you. International carriage conventions cap carrier liability at a low per-package or per-kilo number that has nothing to do with your invoice value, and a long list of perils (acts of God, perils of the sea) excuses the carrier entirely. The liability included in freight is not insurance — the one sentence this article exists for; everything else is how to close the gap.
ICC three tiers: coverage descending from A to C
Marine cargo insurance runs mainly on the Institute Cargo Clauses:
ICC (A) — all risks: covers all fortuitous external loss except the listed exclusions (inherent vice, insufficient packing, delay). Most expensive and least argumentative — the insurer must prove an exclusion applies, not you proving coverage.
ICC (B) — the enumerated middle: covers listed perils only — fire and explosion, stranding and sinking, capsizing, seawater entry, loss overboard during loading. Notably absent: theft, shortage, rainwater — the everyday losses.
ICC (C) — the enumerated floor: major casualties only (fire, stranding, capsizing, general average sacrifice); even seawater entry is out. Cheap, and the gap is widest.
Add-ons: War Risks and Strikes are excluded from all three tiers — lanes through the Red Sea and Middle East, or strike-prone ports, need the riders.
The practical advice is short: general export cargo goes straight to (A); the premium saved on (B)/(C) is out of all proportion to the claims fight it buys. Reserve them for negligible values or a buyer’s explicit instruction.
The insured amount: invoice plus ten percent
The trade convention is invoice value × 110% (CIF plus one-tenth). The extra tenth covers what the invoice cannot show after a loss — reshipment time, expected profit, incidentals. It is the worldwide default, and under letters of credit the banks examine documents against it.
The overlooked question is whose risk, and over which stretch. Where risk passes from seller to buyer is set by the trade term — under CIF the seller insures but the buyer benefits; under FOB the ocean risk already sits with the buyer. Mis-set terms create the farce of “the party with the loss has no policy; the party with the policy has no loss” — the mechanics live in DDP, DAP and risk transfer. Check the policy’s transit scope too: warehouse-to-warehouse covers the US inland leg; port-to-port leaves the truck stretch bare.
A claim is four documents, starting the moment the cargo lands
- The policy — the insurance relationship exists
- The bill of lading — your title and the fact of carriage
- The survey report — notify the insurer immediately and let their appointed surveyor attend; this report sets the loss
- The claim letter and loss statement — the formal demand with figures and basis
What actually ruins claims is the receiving dock: note the damage on the delivery receipt at the moment of receipt (a clean signature concedes good condition), photograph everything, call the insurer before moving the goods — a surveyor arriving after the stack has been dispersed can certify little. And consolidated LCL cargo, handled and re-handled through CFS stations, carries naturally higher damage odds — all the more reason never to sail it bare.
Where SKYCARGO fits
SKYCARGO INC arranges cargo cover alongside the freight itself — tier, insured amount and transit scope matched to your trade terms, and on a loss we coordinate the survey and document chain from the US end. Tell us the cargo and terms and the risk column gets closed properly. (Personal parcels: Shiptw.)
Policy terms follow each insurer’s wording; claims procedure follows the policy. Reference only — arrange insurance with licensed providers.
