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International Forwarding Association Blog » European Logistics » Cargo Shipping, Benefits, Coverage, and Premiums

Cargo Shipping, Benefits, Coverage, and Premiums

Cargo insurance protects loads against risks such as theft, damage, loss, and other incidents. Unpredictable weather and local conditions, infrastructure quality, and policies and regulations make shipping and handling of cargo more complex. To this end, insurance helps protect cargo in storage and transit by compensating for the value of loads.

Why Purchase Insurance

The main reason is that the liability of shipping lines, airlines, and other carriers is limited. This means that compensation may be significantly lower than the value of goods in transit. Customers that opt for insurance coverage are offered compensation for the cost of damaged or lost goods equal to their replacement value.



It should be noted that different liability guidelines apply under the Convention Merchandises Routiers, Warsaw Convention, Montreal Convention, Hamburg Rules, and Hague Visby Rules. It is important to check the trading conditions of shippers and documents such as sea waybills and bills of landing for more details.


The main benefits for customers include quick claims handling, customized insurance coverage, invoice value reimbursement, and coverage against all risks. Members of the International Freight Forwarders Network that opt for cargo insurance enjoy additional benefits such as coverage against cargo rejection and liability resulting from the activities of airlines, warehousemen, and customs brokers. Insurance providers target repairers, retailers, miners, primary producers, wholesalers, manufacturers, and businesses in other industry sectors.


European logistics providers work with insurers that offer coverage for stolen and lost goods, damage, and vehicle repairs.  Damaged goods are items that get wet, dented, or scratched during transportation. Coverage is also available for trailers and trucks that get damaged as a result of vandalism, flood, earthquake, windstorm, hail, theft, fire, or collision. In general, insurance providers offer coverage for theft, non-delivery, damages due to heavy weather and collision, employee dishonesty, and customs rejection. Covered events also include cargo abandonment, infestation, and damages as a result of inappropriate packing.


The premiums depend on the cost of equipment and factors such as upkeep and age of vehicles and employment history, age, and experience of drivers. The cost of the coverage also depends on whether shipment is international or domestic, the expiry date of the policy, and the value of goods shipped.

Freight forwarders that install modern equipment and use new vehicles are offered lower premiums. The shipment route also plays a role in determining premiums. Insurance providers take multiple factors into account, including severe weather conditions, frequency of inclement weather, and population density. Avoiding transit through high-traffic and high-population metro areas helps reduce insurance premiums. Another way to lower premiums is to hire experienced drivers with clean records and fewer violations and accidents. The age of drivers is also an important factor given that old and young drivers fall in the high-risk category of drivers who get involved in more accidents. Finally, driver experience is an important consideration as statistics show that experienced drivers are better able to deal with problems of different nature.