A big hand carrying cargoes

To establish your name in the shipping business, you must ensure safe and timely freight delivery. Why? Doing so will introduce your competency in the industry, especially to the customers who patronize your products. However, one may never know when a problem will arise while your goods are in transit.

In this case, you need something to protect you from unexpected loss. Damages and losses incurred would impact your business, not only by the costs but also the clients' trust that you built with them. In this regard, you must safeguard your business with cargo insurance. Keep reading to learn more about this insurance.

What is Cargo Insurance?

Cargo insurance is a policy that covers your cargo and protects you from financial turmoil if your cargo is damaged or stolen. You'll be reimbursed up to your insurance policy limit if your freight is damaged due to a covered event.

What does it cover?

  • Natural disasters
  • Piracy
  • Transportation accidents
  • Acts of war
  • Freight abandonment
  • Customs disapproval

What does it not cover?

  • Damage due to faulty products
  • Damage due to unsafe packaging
  • Hazardous items
  • Other fragile merchandise
Transport methods (some only cover cargo shipped by plane, truck, or ship)

An added note: FBABEE advises purchasing insurance for Amazon FBA sellers to safeguard their best interests upon shipping their goods.


Cargoes on a ship with a big buckle labelled with Safety

Safeguarding your freight with cargo insurance comes with benefits that define how helpful insurance is to your business.
  • It secures you from financial loss.
  • It gives you peace of mind as your shipment is transported.
  • It protects your income stream from unexpected interruptions.
  • It still generates revenue based on coverage.
  • It ensures a smooth claim procedure.
  • It simplifies the process of disclosing losses.

Two Types

There are two types of cargo insurance: Land and Air and Marine Insurance. The coverages under each category are listed below.


Land cargo insurance covers freight shipped by land, such as trucks and small utility vehicles (SUVs). Other risks associated with land freight shipping are theft and collision damages. Due to its limited reach, it is commonly used for domestic cargo only.

Illustration of cargo transports

Air & Marine

Air and Marine Cargo Insurance covers your business from ocean and air freight risks for international shipments. These risks may include loading and unloading, piracy, disasters, and other dangers on planes and ships. Below are its categories.

Single Coverage

This type of policy, also known as a specific coverage policy, provides coverage for freight on a per-delivery basis and is particularly suitable for enterprises that ship occasionally.

Open Coverage

Typically, this policy covers freight for a set time (usually a year), and numerous shipments can be protected under a single policy. If you ship regularly, this is an effective risk management tool. There are two kinds - Renewable and Permanent.

The renewable policy is suitable for single trips as it can be extended after the cargo has been shipped. Permanent allows unlimited shipping as long as the policy is in effect and applied during that period.

All Risk

It covers damages and losses as long as the goods are not prone to damage, loss, or spoilage. It doesn't protect them if the causes include war, importer or exporter's negligence, delays/rejections from customs, unpaid goods, and natural disasters.


This policy covers the seller even if the client didn't insure the shipment to avoid financial loss. In some cases, the consumer, not the vendor, is the one who must bear the cost of the insurance. If consumers receive defective goods, they often refuse to take them to escape liability. However, the seller can turn to the judicial process for assistance, but this is a time-consuming and potentially costly.

Warehouse to Warehouse

Upon unloading the ship, it safeguards the cargo as it travels to the customer's warehouse. It doesn't matter if your cargo is transported in the same truck as other cargo; this rule only applies to your stuff.

Shipment container truck parked at the warehouse

General Average

In this case, your shipment is only partially covered by the insurance. It is a standard requirement for ocean freight where all cargo owners are required to cover all losses if some cargo onboard is lost or destroyed at sea due to a problem. Even if your shipment is unharmed, you'll still be responsible for the coverage of others.

Free from Particular Average

It only covers significant cargo damage or loss. In the event of damage or loss, the shipper is only responsible for a portion of the shipment's value. Additionally, it protects against risks not covered by an all-risk policy, such as inclement weather conditions, theft, collision, and sinking/derailment.


With all the advantages you could get upon purchasing cargo insurance, it's best to get one to protect you from unforeseen events that might rob you of afterward. After all, what's an additional small expense compared to if your branding is at stake when problems arise. Having one is a good way of securing your money and your name at the same time.