Marine cargo insurance: what it covers and who carries it
Cover for goods moving by sea, air or land across borders, including while in store between legs of a journey.
Data as at · refreshed by scripts/seed-graph.mjs
In short
- Marine cargo covers goods moving internationally or domestically by sea, air, road or rail, including storage between legs.
- International trade terms decide who carries the risk at each point of a journey, and they do not always match who owns the goods.
- Carrier liability regimes cap what a shipping line owes, usually far below the value of the cargo.
Marine cargo is the cover importers and exporters need and frequently assume somebody else has arranged. It follows goods along a journey rather than sitting at one address.
The name is historical: the class covers air and land legs as readily as sea, and most policies contemplate a door-to-door movement.
Also called: marine cargo, cargo insurance, import and export cover
Who carries the risk, and when
International sale terms allocate risk between buyer and seller at defined points, and the point where risk passes is not always the point where title passes. A business can own goods it does not bear the risk for, and bear the risk for goods it does not yet own.
Reading the term on the purchase order is the practical starting point, because it determines whether the business needs cover for that leg at all.
Why the carrier is not the answer
International carriage is governed by conventions and trading conditions that limit a carrier’s liability, commonly by weight rather than by value. A container of high-value goods lost at sea will not be made good by the line’s liability.
That gap between carrier liability and cargo value is the reason the class exists.
What people get wrong about it
The first error is believing the freight forwarder has insured the goods. A forwarder usually arranges carriage and may offer cover, but arranging is not insuring.
The second is assuming cover ends at the wharf, when most losses occur in the road legs and in storage.
The third is insuring the invoice value only, when the loss on arrival includes freight and duty already paid.
Questions
- Does the shipping line insure my cargo?
- No. A carrier has limited liability under international conventions and its own conditions, usually calculated by weight rather than value. That is a fraction of what the goods are worth.
- My supplier says the goods are insured. Am I covered?
- It depends on the sale term and where risk passes. A seller insuring its own risk up to a point does not necessarily cover the buyer beyond it, and the buyer may be uninsured for the remainder of the journey.
Occupations that commonly carry it
Ordered by how central this cover is to each occupation in the graph. A pattern in the data, not a statement that any business is required to hold it.
- Freight forwarders — Arranging carriage of goods for shippers, usually under trading conditions.
- Wholesalers and distributors — Supply of goods to other businesses, carrying products liability down the chain.
- Online retailers — Sale of goods online, carrying product and data exposures without a shopfront.
- Manufacturers — Making and finishing goods for sale, where the product carries liability past the gate.
- Truck operators — Heavy vehicle freight operation, as an owner-driver or a small fleet.
Sources
- Moneysmart (ASIC) — General guidance on business insurance from the regulator’s consumer site. A starting point, not a definition of this cover.