Many shippers assume that if goods are lost or damaged in transit, "the carrier will pay". In practice, international conventions limit carrier liability to amounts that are often a fraction of the goods’ value — and in many situations the carrier is not liable at all. Cargo insurance is what actually protects the value of your shipment.
Carrier liability: low limits, many exclusions
| Mode | Main convention | Liability limit (indicative) |
|---|---|---|
| Air | Montreal Convention | A limit per kilogram expressed in SDR (Special Drawing Rights), revised periodically |
| Sea | Hague-Visby Rules | 666.67 SDR per package or 2 SDR per kg, whichever is higher |
| Road | CMR Convention | 8.33 SDR per kg of gross weight |
For high-value, lightweight goods — electronics, textiles, pharmaceuticals — these limits can represent a small percentage of the real value. Carriers are also exempted in a number of cases, such as some navigation errors at sea, fire, insufficient packing or inherent vice of the goods.
General average: a risk few people know
When a ship faces a serious emergency and sacrifices are made to save the voyage — for example, jettisoning cargo or paying for salvage — the costs are shared between the ship owner and all cargo owners in proportion to their value, through general average. Even if your container is undamaged, you may have to pay a contribution before your goods are released. Insured cargo owners have the guarantee provided by their insurer; uninsured owners must pay a cash deposit.
The Institute Cargo Clauses (ICC)
Most marine cargo policies worldwide are based on the Institute Cargo Clauses, in three levels of cover:
- ICC (A) – "all risks": covers all risks of loss or damage, except those specifically excluded (such as inherent vice, insufficient packing, delay, wilful misconduct). The broadest and most recommended cover.
- ICC (B): covers a list of named perils — including fire, stranding, collision, earthquake, washing overboard, entry of seawater and total loss of a package during loading or unloading.
- ICC (C): the most limited list of named perils, essentially major casualties such as fire, stranding, sinking, collision and general average.
War and strikes are covered by separate clauses that can be added to the policy.
Incoterms and insurance
Only two Incoterms® 2020 rules oblige the seller to insure: CIF (minimum cover, ICC C) and CIP (high cover, ICC A). Under all other rules, each party should decide whether to insure the part of the journey where it bears the risk. A Moroccan importer buying FOB or FCA is carrying the risk from origin: the insurance is its own responsibility.
How much to insure
The usual market practice is to insure the CIF value plus 10%, to cover the goods, the freight, the insurance and a margin for additional costs.
If something goes wrong
- Note any visible damage or shortage on the delivery document before signing, with precise reservations.
- Take photos and keep the packaging.
- Notify the carrier in writing within the legal deadlines (they are short — sometimes a few days).
- Inform your insurer immediately; a surveyor may be appointed.
- Gather the documents: invoice, packing list, transport document, delivery note with reservations, photos and survey report.
Protect your shipments
We can arrange cargo insurance for your sea, air and road shipments, door to door. Ask for insurance with your quote.
