Cargo Insurance Explained

Why carrier liability isn't enough

International ocean shipping operates under the Hague-Visby Rules (1968) — a treaty most countries follow that limits how much an ocean carrier can be held responsible for if cargo is lost or damaged.

The liability cap is the higher of:

• 666.67 SDR per package, OR
• 2 SDR per kilogram of the cargo's gross weight

The carrier picks the higher of the two when calculating their max liability. For a typical mid-size sedan (~1,500 kg), the per-kg calculation governs — but it still works out to a small fraction of the car's actual value.

Practical implication: if Maersk loses your car at sea, the most you can claim from Maersk is whichever SDR calculation is higher — a tiny fraction of the vehicle's worth. You're out the vast majority of the car's value if you didn't buy separate insurance.

All-risk vs named-perils coverage

All-Risk (Institute Cargo Clauses A) — recommended

Covers physical loss or damage from ANY cause except specifically excluded ones (war, strikes, willful misconduct of the insured, ordinary wear and tear, inherent vice of the cargo). This is the broadest coverage available and what we recommend for every vehicle we ship.

Typical exclusions to watch for:

• War risk (separate "War Cover" needed for high-risk routes — Red Sea, certain African ports)
• Strikes, riots, civil commotions (separate "Strikes Cover" available)
• Delay (your cargo arriving late, even if the delay causes financial loss)
• Insufficient packaging (e.g., un-lashed cargo damaged by shifting — packaging is YOUR responsibility)
• Inherent vice (the cargo damages itself — a battery leaking, fluids seeping onto paint)

Named-Perils (ICC B or C)

Cheaper, covers only specifically listed perils — typically fire, sinking, collision, jettison, general average, washing overboard. Anything not listed isn't covered. In the wider freight world it's adequate for low-value bulk cargo where the insurance premium ratio matters. It is not adequate for a single high-value vehicle, which is all we ship.

Typical cost

Premium varies by route (high-risk = higher premium), the vehicle's declared value, and the deductible chosen. Container shipments cost slightly less than RoRo because the vehicle is enclosed and less exposed.

When to buy (and when to skip)

Always buy if:

• The cargo is worth more than you'd want to lose outright
• You couldn't easily afford to replace it
• The vehicle is irreplaceable (a classic, a collector car, a one-off restoration)
• The route passes through any war-risk zone (Red Sea, certain West African ports during instability)
• It's a vehicle (always recommend)

Reasonable to skip if:

• The vehicle is worth little more than its parts value and you'd accept losing it outright
• You're a frequent shipper who self-insures (the math works out long-term)
• The vehicle is already covered under a broader business policy

The claim process — what actually happens if something goes wrong

Most claims fail not because of carrier denial but because of process mistakes by the claimant. Here's how to do it right:

1. Note discrepancies at delivery

When the cargo is released at the destination port (or delivered to your consignee's location), the consignee MUST inspect and note any visible damage or shortage on the delivery receipt BEFORE signing. Signing a clean receipt = signing away the claim. If there's any doubt, write "subject to inspection" or note specific concerns.

2. Notify insurer within 7 days

Most policies require notification within 7 days of delivery. Email or call the insurance contact immediately when damage is found. Late notification can void the claim.

3. Photograph everything

Damage photos, packaging photos, container/seal photos, delivery receipt with notation. The insurer's surveyor will want to see all of these. The more documentation, the faster the claim.

4. Get a surveyor's report

The insurer will appoint (or you'll appoint) a marine surveyor to assess the damage and provide an independent report. There's a modest surveyor fee, and the report is required for any significant claim.

5. Submit the claim package

Typical documents: claim form, original Bill of Lading, commercial invoice, packing list, surveyor's report, photos, delivery receipt, repair estimates (if applicable), correspondence with the carrier.

6. Wait 30-90 days for settlement

Most straightforward claims settle within 30-60 days. Disputed claims (where the cause of damage is unclear) can take 3-6 months. Settlement is paid in the currency your policy specifies.

3 common claim-killing mistakes

1. Signing a clean delivery receipt with damage present

If your consignee accepts the cargo without noting damage, you've waived the right to claim. Train your consignee (or whoever picks up at port) to inspect FIRST and sign LAST.

2. Throwing away damaged packaging

Don't dispose of damaged lashing straps, blocking, wheel chocks, anything. The insurer wants to see it. If you've cleared the dock and tossed everything, the surveyor can't validate the damage origin.

3. Under-declaring value to save on premium

Declared value drives both premium AND payout. Under-declare to shave a little off the premium, and the insurer will only pay out up to that lower declared value if the car is lost — leaving you to cover the gap. Always declare true replacement value.

Where Swift Shipping stands on this

We don't sell insurance, and you should be wary of any forwarder who offers to. In Ontario, issuing a policy or collecting a premium without an insurer's licence is an offence under the Insurance Act — and a "certificate" from a freight forwarder who isn't licensed may be worth nothing at the moment you need to claim it.

What we do instead: tell you plainly that the carrier's liability is capped far below your vehicle's value, point you at a licensed marine broker, and hand that broker the shipment details they need — vessel, routing, declared value, dates. You buy the cover directly, in your own name, from someone regulated to sell it. Ask for all-risk (ICC A) at full replacement value, and ask about warehouse-to-warehouse if you want the cover to start at collection rather than at the port.

Bottom line

Cargo insurance is the cheapest insurance most people will ever buy relative to the catastrophic downside it covers. 1.2-2.5% of declared value to fully protect a vehicle-sized shipment is a small price for not waking up to a total loss with no recourse.

Get a quote for the freight, then take the shipment details to a licensed marine broker for the cover. Two suppliers, two invoices — and a policy that actually pays out in your name.

Questions we didn't cover? Reach out.