Cargo Insurance

Overview

Cargo insurance protects the owner of goods or the party responsible for transporting them against financial loss if the cargo is damaged, destroyed, lost, or stolen during transit. Whether goods are moved by truck, rail, ship, or aircraft, cargo insurance ensures that the value of the shipment is recoverable. This coverage is essential for logistics companies, freight carriers, manufacturers, distributors, and any business that regularly ships or receives goods.

How It Works

Cargo insurance can be structured in several ways depending on who purchases it and how the goods are being transported:

• Shipper's interest cargo insurance: Purchased by the owner of the goods to protect their financial interest in the shipment. This is particularly important because carrier liability is often limited by law or contract.
• Motor truck cargo insurance: Purchased by the trucking company to cover goods entrusted to them by shippers. Required by federal regulations for interstate carriers.
• Ocean cargo / marine cargo: Covers goods transported by sea, often on a warehouse-to-warehouse basis.
• Air cargo: Covers goods during air transit and ground handling.

Coverage can be written on different bases:

• All-risk: Covers any cause of loss not specifically excluded (broadest coverage)
• Named perils: Covers only the specific perils listed in the policy (fire, theft, collision, etc.)
• Single shipment: Covers one specific shipment
• Open cargo / blanket: Covers all shipments during the policy period up to a per-shipment limit

Common exclusions include loss due to inherent vice (natural deterioration), improper packing, delay, and war.

Compliance Relevance

Cargo insurance is relevant in COI compliance for vendors involved in transportation, delivery, or logistics:

• Delivery vendors: Contractors delivering materials, equipment, or supplies to a project site should carry cargo coverage adequate to replace the goods if lost in transit
• Moving companies: Vendors hired to relocate tenant property or office equipment need cargo insurance to cover the items in their care
• Carrier liability limitations: Federal law limits a motor carrier's liability (often to $0.60 per pound), which is far below the actual value of most goods. Requiring cargo insurance fills this gap.
• Supply chain protection: For projects dependent on timely material deliveries, cargo insurance ensures that a loss in transit does not create costly project delays

Cargo insurance is typically evidenced on an ACORD 25 in the auto section or the Description of Operations field, or on a separate inland marine / cargo certificate. Compliance platforms should track cargo coverage for vendors in transportation and logistics categories.