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International Forwarding Association Blog » Logistics services » Types of Cargo Insurance Available to Freight Forwarders

Types of Cargo Insurance Available to Freight Forwarders

Moving goods across distances can be a complex process, with cargo often being shipped across international borders. The International Forwarding Association members make every effort to reduce risks, including damage and loss, but unexpected risks and accidents may occur. For this reason, it is important that logistics companies become familiar with the various types of coverage that can help protect them against financial loss. Common policies to look into are air, maritime, road, and rail cargo insurance.


Air Cargo

Air cargo insurance offers coverage for damage and loss of goods due to improper loading and packaging and during unloading and loading. The policy typically covers cargo for perils such as burglary and theft, accidents, and natural disasters such as earthquakes, tornadoes, and hurricanes. At the same time, the coverage may have some exclusions and limitations, like the destination of the shipment, the types of goods transported, and preexisting damage such as weakness or inherent defects. Examples of exclusions are also missed deadlines and delays, inadequate protection of cargo, and unexplained shortages and losses.


Maritime Cargo

This type of coverage offers protection against damage or loss of goods while shipped by waterways or sea. The range of covered perils includes theft, accidents, and extreme weather conditions such as floods, hurricanes, and storms. Maritime insurance also offers coverage for collisions, fire, and loss and damage resulting from grounding. There are some exclusions and limitations as well, such as nuclear hazards, piracy, delays in transit, and unseaworthiness. The latter applies to vessels that fail to comply with safety regulations or are unfit for travel.


Road Cargo

Road cargo insurance offers protection for a wide range of goods shipped by road, including industrial equipment, high-value items, perishable and hazardous goods, and general merchandise. While the conditions can vary, covered perils typically include natural disasters, fire, theft, and accidents like overturns and collisions. Certain exclusions may also apply such as delay, intentional damage, civil unrest, wear and tear, and nuclear hazards.


Rail Cargo

European freight forwarders can also purchase rail cargo insurance to protect customers’ shipments against loss or damage during transit. This type of policy usually offers protection for perils such as fire, natural disasters, theft, and accidental damage due to derailment and collisions. Certain perils may not be covered, including political risks, loss of marketability or value, misconduct and deliberate damage, and improper packaging. Inherent vice is also a common exclusion when it comes to damage due to the nature of the items being shipped, including fragile and perishable goods.


Other Policies

There are other policies available to freight forwarders such as workers’ compensation, general liability, and errors and omissions insurance. The errors and omissions policy, for instance, offers protection against claims for negligence, oversight, and mistakes. It covers costs such as judgments, settlements, and legal fees. The general liability insurance covers property damage and injury resulting from freight forwarding operations while the workers’ compensation policy offers protection for illness and injury.