Marine & transit insurance
How marine cargo insurance works
How a marine cargo policy attaches to your goods, what it covers, what it excludes, and how the sum insured is set, in plain terms.
The policy looks simple on the certificate. Where it gets real is the day a crate arrives crushed, and the answer to whether you are covered was written months earlier, in the parts nobody read.
In short
- A marine cargo policy attaches when goods leave the origin and stays with them, warehouse to warehouse, to the destination.
- What it pays for depends on the clause level, from All Risks down to major listed perils only.
- The sum insured is usually invoice value plus freight, insurance and an agreed profit margin.
- The common reasons a claim is cut or declined are the standard exclusions, so read those first.
Marine cargo insurance protects goods in transit against loss or damage. To use it well, it helps to understand how a marine cargo policy actually works: when it attaches, what it covers, what it excludes, and how the sum insured is set. That is what this page walks through.
How a marine cargo policy works, step by step
A marine cargo policy attaches when goods leave the origin and stays with them until the destination, on a warehouse-to-warehouse basis. You insure the consignment for its value, cover applies through each leg of the journey, and if loss or damage occurs in transit you claim against the policy with proof of the loss.
Because the cover follows the goods rather than the vehicle, it holds through changes of transport and handling along the way. A consignment that leaves a factory by truck, moves to a port, crosses by sea and is delivered by road at the other end is one insured journey, not four separate risks.
What it covers
Cargo cover pays for physical loss of, or damage to, goods in transit from external causes such as fire, accident, sinking, collision, theft and rough handling. How broad that cover is depends on the clause level chosen, from all-risks down to major listed perils only.
| Clause | Breadth of cover | Typically chosen when |
|---|---|---|
| Clause A (All Risks) | The widest standard cover: loss or damage from any external cause, except the listed exclusions. | The default for most general and higher-value cargo, and where a letter of credit calls for All Risks. |
| Clause B | A named-perils cover, narrower than A, adding certain water and handling perils above the C list. | Goods with a moderate, known risk profile where All Risks is not required. |
| Clause C | The narrowest standard cover: only the major listed perils, such as fire, stranding, sinking and collision. | Robust, lower-value or bulk cargo where only catastrophe cover is needed. |
As a rough guide, All Risks suits most general and higher-value cargo, while the narrower clauses suit robust or bulk goods where only catastrophe cover is needed. The right level is a judgement about the goods and the journey, not a default.
The Institute Cargo Clauses (A), (B) and (C), in their 2009 revision, are the standard market cargo wordings used to set the breadth of cover.
What it does not cover
Standard exclusions include inherent vice, ordinary wear, loss from poor or insufficient packing, delay-related loss, and wilful misconduct. These are the usual reasons a transit claim is reduced or declined, so they are worth reading before, not after, a loss.
Inherent vice means a quality in the goods themselves that causes the loss, like fruit that spoils or metal that rusts in ordinary conditions. Poor packing is the exclusion that catches the most businesses, because it is within your control and is exactly what a surveyor looks for.
How the sum insured is set
The sum insured is usually the invoice value plus freight and insurance, plus an agreed margin, often around ten per cent, for expected profit. Insuring below this leaves you underinsured, which can lead to a proportionately reduced settlement even for a partial loss.
Underinsurance is a quiet trap. If the sum insured is set too low to save on premium, a later claim can be scaled down in the same proportion, so a shortcut at purchase becomes a shortfall at settlement.
Cover attaches to the journey, not the vehicle, which is why the goods stay protected even when they change hands.
A general explanation of how cargo cover works, not advice on a specific policy or insurer. The exact wording, clauses and exclusions vary by policy, which is what to check before you buy.
Frequently asked questions
When does a marine cargo policy start and end?
Most cargo cover works on a warehouse-to-warehouse basis, so it attaches when the goods leave the origin premises and continues until they reach the destination named in the policy, including the ordinary legs in between.
What is the difference between All Risks and named perils cover?
All Risks, Clause A, covers loss or damage from any external cause except the exclusions. Named perils cover, Clauses B and C, only covers the specific perils listed in the wording, so anything not listed is not covered.
How is the sum insured decided?
It is usually the invoice value of the goods plus freight and insurance, plus an agreed margin, often around ten per cent, for expected profit. Insuring for less than this leaves you underinsured and can reduce a claim proportionately.
Does marine cargo insurance cover the ship as well?
No. Cargo cover protects the goods. Cover for the vessel or ship itself is a separate line called marine hull insurance, bought by vessel owners and operators rather than by businesses shipping goods.
What happens when you talk to us
A 20-minute video call with a Growth Advisor — no obligation, and no quote pushed. It opens with a five-minute video from our founder on how the benefits stack works and why Ethika exists; the rest is your questions. You’ll leave with an honest read on your current cover and claims experience, and a straight answer on whether we can genuinely help — even if you never become a client.
20 minutes with a Growth Advisor. No obligation.
A note on this page. Everything here is general information, not insurance, legal, financial or tax advice, and nothing is an offer. For advice about your situation, talk to us.